Wal-Mart Stores, Inc. Unlikely To Submit Counter Bid for Family Dollar

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Wal-Mart Stores, Inc. (NYSE:WMT), the world’s largest retailer is unlikely to submit a counter bid to acquire Family Dollar Stores, Inc. (NYSE:FDO) after conducting an internal review of the discount retailer, according to report from Bloomberg based on information from people with knowledge about the situation.

Wal-Mart’s smaller stores

Wal-Mart Stores, Inc. (NYSE:WMT) believed that Family Dollar Stores, Inc. (NYSE:FDO) is not a good fit for its smaller-format stores, according to one of the sources who requested anonymity due to the private nature of the discussion. Another person stated that the retail giant did not approach the discount retailer regarding an offer.

Brook Buchanan, the spokesperson of Wal-Mart Stores, Inc. (NYSE:WMT) declined to comment regarding rumors of a potential acquisition. Buchanan emphasized, “Our focus remains on our business and what we feel works for the company. What we’re really focused on is running our business and running it well. We believe we’re in a position that we can serve our customers wherever and whenever they want.”

Wal-Mart Stores, Inc. (NYSE:WMT) is opening more smaller-grocery stores to improve its sales performance and to strengthen its competitiveness against rivals. In July, the retail giant appointed Greg Foran as CEO of Walmart U.S. to bring fresh perspectives with his depth of knowledge and global experience. Foran was the former CEO of Walmart China.

Earlier this month, the retail giant said it is planning to overhaul its website early in 2015 to increase its online sales.  Last week, Wal-Mart Stores, Inc. (NYSE:WMT) reduce its full-year EPS guidance due investments in e-commerce and higher than expected healthcare costs in the United States.

Dollar General offers to acquire Family Dollar for $8.9 billion

Yesterday, Dollar General Corp. (NYSE:DG) submitted a counter bid to acquire Family Dollar Stores, Inc. (NYSE:FDO) for $8.9 billion, higher than the $8.5 billion takeover bid by Dollar Tree, Inc. (NASDAQ:DLTR). In addition, Dollar General is also willing to pay the $305 million in breakup fees in case Family Dollar’s deal with Dollar Tree falls apart.

Icahn criticized Family Dollar’s board and CEO

Activist investor Carl Icahn criticized the board of directors of Family Dollar Stores, Inc. (NYSE:FDO) and its CEO Howard Levine for their actions in deflecting counter bids in favor of its deal with Dollar Tree, Inc. (NYSE:FDO).

Icahn said the actions of Family Dollar’s leadership resulted to more than $300 million in unnecessary breakup fees to Dollar Tree. The activist investor pushed Family Dollar to sell itself to Dollar General, but it was rejected by Levine.

According to Icahn, “This is a quintessential example and a reflection of what is wrong with Corporate America. The Family Dollar board is wasting more than $300 million (in breakup fees to Dollar Tree) in an attempt to chill a competing bid from Dollar General, which would keep Howard Levine out of the company once and for all even though the Dollar General bid would enhance the value of Family Dollar stock.”


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