By Chelsey Dulaney
Dollar Tree Inc. on Friday gave an optimistic update on its
pending $8.5 billion acquisition of Family Dollar Stores Inc.,
saying it will have to divest a "relatively small" number of stores
to secure U.S. antitrust approval of the deal, which could close as
early as February.
Dollar Tree said it would work with the Federal Trade Commission
over the next few weeks to determine what divestitures would be
required, but said it would likely be a small number of stores that
won't be material to its plans for the combined company.
Dollar Tree has said it would be willing to shed as many stores
as possible--or sensible--to get its deal done, and the companies
amended their merger agreement to reflect that commitment.
Initially expected to close in November, the deal is aimed at
consolidating the market serving low-income shoppers and building a
stronger competitor to the likes of Wal-Mart Stores Inc.
Meanwhile, larger rival Dollar General Corp. also is in talks
with the FTC about a potential acquisition of Family Dollar. Its
$9.1 billion unsolicited bid was shot down in September by Family
Dollar, which claimed the antitrust risks were too high.
Dollar General has said it would be willing to divest up to
1,500 stores, but Family Dollar's chief executive, Howard Levine,
has said there is a "very real and material risk" that Dollar
General's offer would fail to pass a lengthy regulatory
process.
At the heart of the FTC's review are the similarities among the
discount retailers' businesses and how a combination could affect
competition and pricing. Dollar General and Family Dollar both sell
a variety of consumable and household products at a range of
prices, while Dollar Tree primarily sells goods for $1 or less.
Dollar Tree on Friday touted the regulatory uncertainty of
Dollar General's bid, saying the FTC may require divestitures "far
in excess" of the 1,500 stores Dollar General has said it would
shed.
Dollar General later disputed that claim, saying its documents
and data "tell a very different story" from Dollar Tree's argument.
The company reaffirmed it looks to Wal-Mart, not Family Dollar, in
setting its pricing strategy and said it has provided that evidence
to the FTC.
Family Dollar shareholders are scheduled to vote on the Dollar
Tree deal at a Dec. 23 meeting.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
Access Investor Kit for Dollar General Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US2566771059
Access Investor Kit for Dollar Tree, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US2567461080
Access Investor Kit for Family Dollar Stores, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US3070001090
Access Investor Kit for KKR & Co. LP
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US48248M1027
Access Investor Kit for Wal-Mart Stores, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US9311421039
Subscribe to WSJ: http://online.wsj.com?mod=djnwires