Everything you need to know about the dollar store love triangle

September 5, 2014, 2:13 PM UTC
Inside A Family Dollar Store Ahead of Earnings Reports
Shopping carts sit near the entrance of a Family Dollar Stores Inc. location in Sterling, Illinois, U.S., on Tuesday, March 27, 2012. Family Dollar Stores Inc., the second-largest U.S. dollar store chain, is scheduled to report quarterly earnings on Wednesday, March 28, before the opening of U.S. financial markets. Photographer: Daniel Acker/Bloomberg via Getty Images
Photograph by Daniel Acker — Bloomberg via Getty Images

An ongoing love-triangle keeps making headlines in the discount-retail segment, where two chains are battling to acquire the third in a takeover rivalry that began in July. There has been a lot of back and forth in recent weeks, with the latest announcements coming from two of the players on Friday. Here’s a quick breakdown of where things stand today and how it all has escalated to this point.

Dollar Tree (DLTR)

Dollar Tree kicked things off when it offered to pay roughly $8.5 billion to buy Family Dollar, a merger that was approved by both companies’ boards of directors. Through all of the back-and-forth after Dollar General swooped in with a competing offer, Dollar Tree hasn’t budged on its offer to pay $74.50 in cash and stock.

On Friday, Dollar Tree did provide a few meaningful updates. It now says it will divest “as many stores as necessary” to win antitrust clearance. It also expects the timing of the transaction to accelerate and close as early as the end of November.

Dollar Tree also says the Federal Trade Commission has issued a second request for additional information, though the company (along with Family Dollar) remains confident it can win regulatory approval.

Family Dollar (FDO)

Through it all, Family Dollar has stuck with Dollar Tree’s bid. On Friday, the company said its board “unanimously rejected” the sweetened bid unveiled earlier this week by Dollar General.

Family Dollar says the Dollar Tree deal is not only “financially superior,” but also “reasonably likely to be completed on the terms proposed.” Family Dollar has claimed antitrust concerns are a major factor as to why it won’t accept Dollar General’s all-cash bid.

Notably, activist investor Carl Icahn recently sold his stake in Family Dollar (after successfully pushing management to put the company up for sale). That investment worked out well for Icahn, as he raked in $200 million in the process, according to Reuters.

Dollar General (DG)

Dollar General didn’t immediately return a request for comment on the latest updates from Dollar Tree-Family Dollar on Friday.

Earlier this week, Dollar General raised its bid by $1.50 to $80 per share, and also promised to divest more stores in a bid to ease antitrust concerns.

Dollar General has complained that Family Dollar CEO Howard Levine is motivated by self interest (his father Leon founded Family Dollar). Dollar General hasn’t made public promises about Levine’s role if that offer were to prevail, while Dollar Tree would allow Levine to remain at the merged retailer and take a seat on that company’s board.

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