By Chelsey Dulaney
Family Dollar Stores Inc. has delayed the shareholder vote on
its $8.5 billion deal to be bought by Dollar Tree Inc. as the
discount retailer awaits an update on the divestitures U.S.
antitrust regulators will require to approve the deal.
Family Dollar said it expects an update by the end of the first
week of December on the Federal Trade Commission's review of the
merger. Family Dollar pushed back the vote to Dec. 23 from Dec.
11.
Dollar Tree has said it would be willing to divestas 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 for serving low-income shoppers and
building a stronger competitor to rivals like Wal-Mart Stores
Inc.
The Wall Street Journal reported in September that Dollar Tree's
conversations with the FTC have left it more confident that the
acquisition can be approved with some divestitures of stores. The
FTC's initial review looked at how pricing is set in markets where
Family Dollar and Dollar Tree stores are within 3 miles of each
other, and the fact that Dollar Tree primarily sells products for
$1 shows that the stores have little effect on each other, a person
familiar with the matter said.
In September, Family Dollar shot down rival Dollar General
Corp.'s $9.1 billion unsolicited bid, saying the antitrust risks
are too high. Dollar General has said it would be willing to divest
up to 1,500 stores. Family Dollar, however, was unswayed, saying it
had produced a mountain of evidence in antitrust discussions
showing how Dollar General is a big rival and a factor in
determining its prices.
Family Dollar Chief Executive Howard Levine said there was a
"very real and material risk" that Dollar General's offer would
fail to pass a lengthy regulatory process.
The two chains run very similar businesses selling a variety of
consumable and household products at a range of prices. Both chains
confirmed last month that they received requests for additional
information from the FTC regarding Dollar General's bid.
Dollar General's tender offer, worth $80 a share, remains open
until Dec. 31. In late October, Dollar General said it remained
committed to buying Family Dollar and it would mail a proxy
statement to its target's shareholders, urging them to vote against
the Dollar Tree deal.
Dollar General shares fell 3.2% in morning trading Wednesday,
while Family Dollar shares declined 1.3%.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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