Dollar General is seeking more time to complete its $9.1 billion takeover proposal for Family Dollar Stores as it struggles with the Federal Trade Commission (FTC) regarding the number of divestitures required for the merger.
Dollar General issued an update regarding its discussion with the FTC regarding its proposed acquisition of Family Dollar after Institutional Shareholder Services (ISS) switch its position in favor of Dollar Tree’s takeover bid.
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ISS urged Family Dollar’s shareholders to vote for Dollar Tree’s bid citing the reason that it “offers significant value and certainty of closures.”
Dollar General criticized FTC’s method of reviewing retail mergers
Dollar General emphasized that it has been actively engaged with the FTC regarding its takeover offer for Family Dollar. The discount retailer said it already submitted tens of thousands of documents and attended numerous meetings with the regulator.
According to the Dollar General, the FTC has not reached a final conclusion regarding the number of stores that must be divested to obtain approval for its proposed merger with Family Dollar.
“Dollar General has concluded that the additional step of certifying substantial compliance with the FTC’s request for further information and documentary material (“Second Request”) is necessary,” according to the discount retailer.
Dollar General also criticized the method used by the FTC in reviewing retail mergers in recent years. The discount retailer described the regulator’s approach as “controversial” citing the reason that it “relied heavily on untested theoretical model for predicting circumstances in which pricing will increase.” The company added that the model is “highly sensitive to adjustments in its assumptions and specifications.”
Furthermore, Dollar General said it is concurrently working with the regulator toward certifying substantial compliance, and it aims to complete by February 10, 2015. The company added that it will not to be constrained by a timing agreement with the FTC.
Moreover, Dollar General emphasized that the FTC has 30 days from the date the company certifies substantial compliance with the second request to determine whether it will allow or sue to enjoin the proposed deal.
“Although Dollar General believes that this matter is one that should be amenable to resolution by consent agreement with the FTC, it is prepared to defend litigation if necessary,” according to the company.
Dollar General also urged the shareholders of Family Dollar to support its offer. According to the company, voting the GOLD proxy card means shareholders will be sending a clear message to the board of Family Dollar that they are against a merger with Dollar Tree.