Dollar General Extends Its Offer for Family Dollar

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Family Dollar has been adamant that it is sticking with its deal with Dollar Tree.Credit Rogelio V. Solis/Associated Press

Dollar General on Wednesday extended by more than three weeks its tender offer to acquire Family Dollar shares for $80 apiece.

The largely procedural step came as Family Dollar remained committed to its agreed-upon deal with Dollar Tree for $74.50 a share, which it believes has a greater likelihood of getting approved by regulators. Dollar General extended its offer from Oct. 8 to the end of the month.

Family Dollar has yet to call a special meeting where its shareholders will have the chance to approve or reject the $8.5 billion deal with Dollar Tree. Such a meeting is expected in November or December.

Given that timeline, Dollar General may extend its tender offer, which values the company at $9.1 billion, at least one more time.

If Family Dollar and Dollar Tree win approval from regulators before the special meeting, the companies believe there is a good chance shareholders will take the money on the table and approve the acquisition by Dollar Tree, rather than risk holding out for a less certain but more valuable bid from Dollar General.

It appears unlikely that Dollar General, which made its offer for Family Dollar later, would win approval from regulators before a meeting is called. That means that by voting down the Dollar Tree deal, Family Dollar shareholders would be betting that the Dollar General bid would be approved by regulators.

Dollar General also revealed how few Family Dollar investors have tendered their stock for the $80 offer. Just 126,499 shares have been tendered so far, or about one tenth of 1 percent. That is to be expected at this early stage of a tender offer, but nonetheless serves as a reminder of just how far Dollar General has to go to win over Family Dollar shareholders.