Update: Family Dollar Stores Tells Dollar General To Take A Hike

Aug.22.14 | About: Family Dollar (FDO)

Summary

Dollar General's takeover bid attempt rejected by Family Dollar.

My bullishness on Dollar Tree is renewed.

I previously had lowered my bullishness on Dollar Tree over the concern of it being outbid. That concern is over.

Well, I didn't see that coming - at least not that fast. Anti-trust issues? Family Dollar Stores (NYSE:FDO) and Dollar General (NYSE:DG) sell bubble gum, shampoo, frozen burritos and notebooks. I have trouble believing combining the two stores would be an antitrust issue, but the board of directors of Family Dollar apparently disagree, or perhaps are just eager to merge with Dollar Tree (NASDAQ:DLTR) and get it over with already.

On September 21, three days after my last article on the dollar stores was published, Family Dollar announced its board of directors had already rejected Dollar General's takeover bid citing antitrust issues. You could maybe see that concern with a Wal-Mart (NYSE:WMT) or Target (NYSE:TGT) attempted takeover, but it's hard to imagine these discount variety dollar stores having pricing power or monopoly-like leverage. The release stated:

"The Family Dollar Board, after consultation with its financial and legal advisors who have conducted an extensive antitrust analysis, determined that the Dollar General proposal fails to satisfy this requirement."

It looks like the merger with Dollar Tree is a go. Bye bye, Dollar General.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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