Family Dollar Stores, Inc. (NYSE:FDO) has warned repeatedly that Dollar General Corp. (NYSE:DG)’s bid would raise red flags with regulators, and now there’s evidence to back that up. The retail chain said last week that some state attorneys general are now probing Dollar General’s bid due to antitrust concerns.
However, it appears that the issue isn’t just with Dollar General’s bid. Nayan Das of Reuters reports today that some are also investigating Dollar Tree, Inc. (NASDAQ:DLTR)’s bid.
Welcome to our latest issue of issue of ValueWalk’s hedge fund update. Below subscribers can find an excerpt in text and the full issue in PDF format. Please send us your feedback! Featuring Andurand's oil trading profits surge, Bridgewater profits from credit, and Tiger Cub Hedge Fund shuts down. Q1 2022 hedge fund letters, conferences Read More
Dollar General bid under investigation
Family Dollar Stores, Inc. (NYSE:FDO) said a number of state attorneys general notified it that they will be investigating Dollar General’s bid. The retail chain notified the Federal Trade Commission last week about the investigation, which is related to antitrust concerns.
Earlier this month, Dollar General Corp. (NYSE:DG) entered an increased bid of $9.1 billion in cash to acquire all of Family Dollar. However, Family Dollar’s board again rejected the bid, again recommending that shareholders vote for the bid from Dollar Tree, which is for $8.5 billion in cash and stock.
Dollar General responded by taking its bid hostile and going directly to shareholders. The retail chain has said it will sell up to 1,500 stores and even pay a breakup fee of $500 million if the deal did not receive the approval of antitrust regulators.
Family Dollar did not say which states are investigating the offer.
Dollar Tree bid also probed
Although Reuters initially reported the news about the probe into the Dollar General bid on Friday, the media outline added a single sentence saying that some state attorneys general are also investigating the bid from Dollar Tree.
Dollar Tree has offered to close as many stores as possible to get regulatory approval for a merger with Family Dollar Stores, Inc. (NYSE:FDO). Family Dollar has emphasized that its pricing models differs from that of Dollar Tree, Inc. (NASDAQ:DLTR) enough to pass regulatory scrutiny. However, Family Dollar and Dollar General Corp. (NYSE:DG) are known to price against each other in the markets where they both have a retail presence.