Family Dollar Stores has rejected a higher acquisition bid from Dollar General Corp. and said it will pursue completion of its prior agreement to be acquired by Dollar Tree, citing antitrust considerations.

“The CEO of Dollar General said he believes antitrust is not a risk but did not put forth a proposal that eliminates regulatory risk for Family Dollar shareholders,” Ed Garden, a non-management director of Family Dollar and co-founder and partner at Trian Fund Management, New York, said in a press release.

“Given the significant antitrust issues involved with Dollar General’s proposal, we will not jeopardize the Dollar Tree deal for a transaction with Dollar General that has a high likelihood of not closing due to antitrust considerations.”

Dollar General indicated it would be willing to divest up to 700 stores to make a merger with Family Dollar feasible — approximately the same percentage of the total combined stores represented by the commitment by Dollar Tree to divest 500 U.S. stores.

In a letter to Family Dollar dated Aug. 20, Rick Dreiling, chairman and CEO of Dollar General, said he believes the reason for Family Dollar’s actions may have been more personal. Noting that Howard Levine, chairman and CEO of Dollar General and the son of its founder, had indicated in earlier discussions that he hoped to run any combined company, Dreiling said, “We cannot help but question whether Dollar General’s failure to embrace such requests by Mr. Levine weighed into Family Dollar’s decision to pursue an agreement with Dollar Tree.”

Levine in a reply said Dreiling’s letter “contained blatant mischaracterizations and did nothing to address the antitrust issues in Dollar General’s proposal.”

Family Dollar and Dollar General characterized events leading up to the merger differently, with Family Dollar alleging its larger competitor “engaged a number of times” over the last 18 months but that Dollar General had canceled meetings, declined to schedule a meeting to discuss potential antitrust issues, and said as recently as June 19 of this year that it was not interested in pursuing a deal.

Of that June 19 meeting, Dollar General said, “Although noting that the timing was not optimal for Dollar General, our representatives expressed more than once our interest in exploring a combination with Family Dollar.”

It also said Family Dollar did not reveal it was nearing a deal with Dollar Tree at that time. “Had we left the meeting with the belief that a sale of Family Dollar was imminent, we assure you that our course of action would have been different.”