The $8.9 billion offer by Dollar General to take over Family Dollar was rejected late August foreshadowing a long ordeal ahead. The latter mentioned dollar store company has concerns over the sale due to possible anti-trust issues. With a complete sale of ownership to Dollar General, the transaction would come into serious scrutiny by regulators. A previous offer of $8.5 billion, cash and stock deal, would have had a better chance to make it past regulators, and was more likely to be accepted, says Family Dollar.
To appease the anti-trust regulations, on top of the new offer, Dollar General would agree to close 700 stores. They believe that this would curb any legal action coming down upon the transaction. Family Dollar did not feel comfortable with the deal even with the closing of the stores.
Many believe that this merger will not raise any Federal Trade Commission alarms. In recent years they have allowed the mergers of Men’s Warehouse and Jos. A. Bank, an inter-industry transaction that was not considered to be a violation of any anti-trust regulations. Within the proposed merger at hand, combining Dollar General and Family dollar may not affect the pricing of the target market, it would more closely compete with the giant Wal-Mart. Many believe this is enough precedent and consideration of customer well being for the FTC to allow it.
While currently at a standstill, the possibilities for a transaction occurring are still possible, even probable. Should the deal go through, Dollar General would hold about 20,000 outlets totaling $28 billion in revenue.