business news in context, analysis with attitude

The New York Times this morning reports this morning that Dollar General has made an $8.9 billion bid to acquire Family Dollar, a bid that is significantly higher than the $8.5 billion offered for Family Dollar by Dollar Tree.

According to the story, "The emergence of the unsolicited takeover bid promises a potential clash over the fate of Family Dollar, which has been under pressure from activist investors both outside and inside its boardroom."

The Times reports that Dollar General, the nation's largest dollar store chain, expects to realize between $550 million and $600 million, and is willing to close or sell as many as 700 stores to satisfy antitrust concerns. Still, if its bid is successful, Dollar General would end up with close to 20,000 stores in 46 states and something like $28 billion in annual revenue.

The Times reports that "Rich Dreiling, Dollar General’s chairman and chief executive — who had disclosed plans to step down earlier this year — would instead stay on board and hold both roles at the combined company through 2016," if the bid is successful.
KC's View:
There are a few possible scenarios here. One is that Dollar General gets Family Dollar, and becomes bigger and more powerful in the segment. Another is that this competing bid just drives up the cost of an eventual acquisition by Dollar Tree, making it more difficult to make the transaction financially viable.

Or, maybe someone else gets into the act…a bigger company, perhaps, that could use such an acquisition as a game-changer that could jump-start its sales and small-store strategy?

Just ruminating, here…