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The Wall Street Journal reports that Dollar General CEO Rick Dreiling says that his company remains committed to acquiring Family Dollar, despite that company's rejection of its $9 billion cash offer. Family Dollar says that it plans to go forward with a deal to sell the company to Dollar Tree for $8.5 billion.

The Journal writes that "antitrust concerns are the main issue to bringing together the largest two players among the small discount stores. Dollar General proposed divesting up to 700 stores in its bid for Family Dollar but both sides are analyzing whether that would be enough to get the blessing of the Federal Trade Commission … One fear from the Family Dollar side is over an FTC test that would assess whether the retailers are more aggressive with prices in areas where their stores are nearby, compared with locations farther apart. If the agency finds that to be the case, they could force more store divestitures, or quash the deal altogether, over worries the merger would lead to higher prices for consumers."

The story goes on: "Dollar General and some Wall Street analysts say they believe the antitrust concerns are overblown. That is because Dollar General sets the prices for a 'vast majority' of its items on a national basis, according to a person familiar with the matter. The strategy means that a box of Oreo cookies or bottle of Tide detergent sells for the same price in Springfield, Mass., as in Albuquerque, N.M., regardless of the store's proximity to a Family Dollar store.

"Dollar General is more concerned with prices at Wal-Mart, this person said. And combining with Family Dollar would be one way to better compete with the discounting behemoth, especially at a time when Wal-Mart is making a big push into smaller stores."

BREAKING NEWS: This morning, Dollar General announced that it is raising its bid for Family Dollar to $9.1 billion.

In addition, Dollar General pledged to pay a reverse termination fee of $500 million of their merger falls apart because of antitrust issues, and said it would be willing to more than double the number of stores it would be willing to divest because of antitrust issues to 1,500.

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