Family Dollar Stockholders Okay Dollar Tree Merger

(RTTNews) - Dollar General's (DG) dogged efforts to buy Family Dollar Stores (FDO) were scuttled after the discount retailer on Wednesday said its stockholders approved a lower but more hassle-free $8.7 billion merger with Dollar Tree (DLTR).

The approval highlights the focus of Family Dollar stockholders in getting regulatory clearance for the merger with Dollar Tree, rather than face the risk of antitrust hurdles that a deal with Dollar General would possibly lead to.

Detailing the votes cast in favor of the Dollar Tree merger, Family Dollar said on a preliminary count, about 74 percent of the total outstanding and 89 percent of the total shares voted in favor of the deal.

The merger is still subject to approval by the Federal Trade Commission.

As previously announced, Dollar Tree and Family Dollar have agreed to provide the FTC with four weeks' notice prior to closing, possibly in March.

By the end of January, Dollar Tree expects to reach a preliminary agreement with the FTC on the list of substantially all of the stores to be divested.

In July, Dollar Tree agreed to buy Family Dollar in a cash and stock deal now valued at about $8.7 billion. The sale delivered a windfall to the company's biggest shareholder Carl Icahn, who acquired his 9.4 percent stake in June 2014, and who was exhorting Family Dollar to be put up for sale.

But in a few weeks, Dollar General came up with a couple of offers for Family Dollar that were rejected. Dollar General's latest was a hostile $80 per share offer for Family Dollar, or $9.1 billion in cash, but the deal was beset with antitrust concerns on the part of Family Dollar board.

Meanwhile, the new Dollar Tree will keep both brands and operate both dollar store models—Dollar Tree's, where all items are sold for $1, and Family Dollar's model, where everyday goods and groceries are sold at discounted prices.

When the merger closes, Dollar Tree will operate more than 13,000 stores in 48 states and five Canadian provinces with annual sales exceeding $18 billion.

On his part, Dollar General CEO Rick Dreiling said he was dismayed with the votes cast in favor of Dollar Tree by Family Dollar shareholders. Dreiling said not only Family Dollar stockholders, but also consumers will not have the opportunity to benefit from the cost savings and efficiencies that a merger between Dollar General and Family Dollar would present.

Dollar General said Rick Dreiling will continue as CEO of the company through January 29, 2016 or, if earlier, after the appointment of successor.

Also the company said it is engaged in the development of its strategic growth plans, capital allocation priorities and leadership succession.

FDO is trading at $76.37, up $0.82 or 1.09%, on a volume of 2.2 million shares on the NYSE.

DLTR is trading at $69.88, up $2.07 or 3.05%, on a volume of 4.9 million shares on the Nasdaq.

DG is trading at $68.90, up $1.69 or 2.51%, on a volume of 4.9 million shares on the NYSE.