By Michael Calia
Family Dollar Stores Inc. on Monday said getting the needed
regulatory approvals to close its deal with smaller rival Dollar
Tree Inc. is a "virtual certainty," while the company again
recommended that its shareholders approve the transaction.
Family Dollar, in a letter to shareholders, argued that
following talks with the U.S. government, it would be tough for
Dollar General Corp., which has made a bigger offer, to divest
itself of enough stores to secure regulatory approval.
Dollar Tree, likewise, said Monday that it expects to reach a
deal by the end of this month with the Federal Trade Commission
over how many stores it must divest to complete its $8.5 billion
acquisition of Family Dollar. The discount retailer said it
believes it will need to divest fewer than 300 stores after the FTC
provided it with a list of about 300 stores that apparently raise
antitrust concerns.
Family Dollar said Monday that the count of "presumptively
problematic stores" is 310, based on the regulator's most recent
analysis. Dollar Tree and Family Dollar both said they expect
several stores to be removed from the FTC's list.
Family Dollar Chief Executive Howard Levine said in the letter
that the FTC's analysis "reaffirms the statements that we have been
making for several months now about the inability of the Dollar
General proposal to be consummated on the terms proposed by Dollar
General and the certainty of the Dollar Tree merger."
Dollar General didn't immediately respond to a request for
comment.
Dollar Tree added that it has identified potential buyers for
stores that would have to be divested and that it expects to
present a list to the FTC for approval within a month.
Family Dollar said it estimates that, based on the FTC's
analysis, there could be as many as 3,500 to 4,000 presumptively
problematic stores in Dollar General's unsolicited, $9.1 billion
proposal.
The updates from Dollar Tree and Family Dollar come after Family
Dollar shareholders pushed back a vote on the deal for a second
time to give Dollar General time to try to convince Family Dollar
to accept its all-cash offer. Family Dollar, in its letter Monday,
urged shareholders to vote for the Dollar Tree deal at the Jan. 22
special meeting, warning that Dollar Tree isn't willing to agree to
further adjournments.
Dollar General made an unsolicited bid over the summer after
Family Dollar and Dollar Tree announced their agreement. Family
Dollar has resisted Dollar General's offers because of regulatory
concerns over the amount of stores it would have to close to meet
antitrust requirements. The FTC has been reviewing both potential
transactions.
Write to Michael Calia at michael.calia@wsj.com
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