The Institutional Shareholder Services (ISS), a proxy advisory firm shifted its position regarding Dollar Tree’s proposed takeover of Family Dollar Stores.
On Wednesday, ISS said, “Shareholders should vote FOR the Dollar Tree transaction, which offers significant value and near certainty of closure.”
Last December, ISS urged shareholders to vote against the $8.5 billion cash and stock proposal of Dollar Tree to acquire Family Dollar Stores. The proxy advisory firm also encouraged investors to consider the $9.1 billion in cash offered by Dollar General.
Khrom Capital was up 32.5% gross and 24.5% net for the first quarter, outperforming the Russell 2000's 21.2% gain and the S&P 500's 6.2% increase. The fund has an annualized return of 21.6% gross and 16.5% net since inception. The total gross return since inception is 1,194%. Q1 2021 hedge fund letters, conferences and more Read More
Dollar General failed to follow through on Family Dollar offer
ISS changed its position regarding the Dollar Tree’s takeover proposal for Family Dollar Stores after Dollar General provided little updates regarding its offer particularly its discussions with antitrust regulators.
The proxy advisory firm said, “Dollar General’s near-silence on regulatory progress – particularly its failure to meaningfully follow through on its own unforced commitment to provide a meaningful update in December – speaks volumes.”
The Federal Trade Commission (FTC) is reviewing both the proposals of Dollar Tree and Dollar General to acquire Family Dollar Stores. The commission is concern that the deal could result to higher prices of commodities offered by the discount retailers.
Dollar Tree is willing to divest as many stores as necessary
Dollar Tree recently stated that it is willing to divest as many stores as necessary to obtain regulatory approval to acquire Family Dollar Stores. Its conviction prompted Family Dollar CEO to say that Dollar Tree’s proposal have “virtual certainty” to get approval from regulators.
On the other hand, Dollar Tree CEO Bob Sasser stated that the company is no longer willing to agree on further extensions for shareholders to vote on the transaction. He explained that further delays would significantly financing costs for the deal.
Further delay could jeopardize Dollar Tree- Family Dollar merger deal
According to ISS “no additional adjournment appears warranted” on the takeover deal for Family Dollar Stores citing the reason that the additional one month delay last December did not led to any material improvement in Dollar General’s deal.
The proxy advisory firm added that an additional adjournment could jeopardize the Dollar Tree transaction.
Ed Garden of Trian Management and a member of the board of Family Dollar Stores reiterated its support for Dollar Tree’s offer. According to him, “I strongly urge my fellow Family Dollar stockholders to lock-in the premium value and certainty offered by our merger with Dollar Tree …”