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Smoke And A Coke? Dollar General Maintains An Old Reliable Sales Initiative
- Dollar General remains a tobacco retailer.
- Cigar sales up 2x-3x historical levels.
- Does Phillip Morris have a role in Dollar General's hostile takeover of Family Dollar?
- Institutional ownership and growth charts: Dollar General and Altria Group are top performers.
- On September 10, news broke that Dollar General would be conducting a hostile bid for Family Dollar valued at $80 per share.
- This confirms my opinion that Dollar General, over Dollar Tree, has the most to benefit from a transaction, and that the deal is pricey for the business.
- While specifics weren't given, my previous work indicated that Dollar General would very much like to push for a deal in its favor.
Dollar General Should Let Family Dollar Go And Pursue Fred's Instead
- Family Dollar is being bought by Dollar Tree when recent speculation was that Dollar General would be the acquirer.
- Dollar General offered a higher bid, but Family Dollar turned down the offer.
- Fred's Super Dollar continues its search for a buyer.
Dollar General Earns Bullish Thesis On Its Way To Delivering Growth In The Long TermEquity Watch • Tue, Sep. 9
- Promotional activities will strengthen the market position and grow the top line in the long run.
- Efforts to improve performance and industry position will put pressure on margins.
- Dollar General's growth prospects solidified if it successfully acquires Family Dollar.
Update: Dollar General Raises Bid For Family Dollar, Threatens Hostile Takeover
- Dollar General has raised its bid for Family Dollar, moving to $80 per share, up from its original offer of $78.50 per share and over Dollar Tree’s earlier offer.
- In a previous article, I predicted that Dollar General’s efforts could push Family Dollar’s share price higher.
- Today’s event confirms that opinion and the deal isn’t settled yet.
- Dollar General announced that it would be willing to up the ante on its proposed purchase of Family Dollar, offering $80 per share.
- This news confirms my opinion that Dollar General realizes that it has more to gain from purchasing the company than Dollar Tree does.
- While I could not predict if another buyout offer would, in fact, materialize, I alluded to a high possibility that it could.
Update: Dollar General Raises Its Bid For Family Dollar To $80 Per ShareThe Specialist • Tue, Sep. 2
- Dollar General tops its previous all-cash bid at $78.50 with an $80 bid.
- This adds confidence to my theory that Dollar General fears a Dollar Tree merger with Family Dollar.
- I was expecting a higher offer and continue to expect a still high offer to possibly come.
Is Fear The Real Reason Dollar General Wants Family Dollar?
- If Dollar Tree gets Family Dollar then Dollar General may be at a competitive disadvantage.
- Dollar General is aggressively pursuing the $1 price point business Dollar Tree is in.
- The final buyout price may be much higher.
- For the quarter, Dollar General matched analyst estimates but came up short on sales growth, suggesting that the business isn't growing as rapidly as Mr. Market might like.
- This reinforces my opinion that analyst forecasts might have been asking too much but also suggests that the business is still an attractive long-term prospect.
- While this information wasn't necessarily anticipated in my earnings preview, it was implied that growth moving forward might be difficult to achieve without acquiring Family Dollar.
Is Dollar General Poised To Beat The Whisper Number?
- The whisper number is $0.83, in line with the analysts' estimate.
- Dollar General has a 37% positive surprise history (having topped the whisper in 10 of the 27 earnings reports for which we have data).
- The overall average post earnings price move is 'positive' (beat the whisper number and see strength, miss and see strength) when the company reports earnings.
Dollar General Looks Interesting But Pricey As Earnings Near
- For the quarter, analysts have what appear to be high expectations for the discount giant.
- Over the past few years, the business has had a heck of a run, suggesting that its long-term prospects could be bright.
- These factors, combined with its potential buyout of Family Dollar, implies that Dollar General is an interesting company, but its strong performance comes at a pretty steep price.
- Family Dollar rejected Dollar General’s bid looking for a faster close with Dollar Tree.
- We still have a long-term bullish thesis on Dollar General and believe they are better off without Family Dollar.
- While we didn’t expect Dollar General’s deal to get rejected (it’s over 5% higher than Dollar Tree’s) we were aware of the regulatory concerns.
Update: Dollar General's Bid For Family Dollar Stores Is Rejected
- Family Dollar Stores has announced its rejection of Dollar General's $78.50 all-cash bid for the company.
- This news comes as a surprise given the bid's superiority in both amount and composition to Dollar Tree's $74.50 cash and stock offer.
- As Family Dollar Stores may be looking for a higher bid as highlighted in my earlier article, the ongoing support for Dollar Tree's $74.50 offer may not continue.
Update: Dollar General Makes Bid For Family Dollar
- Dollar General has entered the bidding war for Family Dollar, as I predicted a few weeks ago, offering $9 billion to buy its rival.
- The deal is considerably higher than Dollar Tree’s offer of $8.5 billion, indicating that Dollar General sees more benefit to an acquisition of Family Dollar than Dollar Tree does.
- As I wrote previously, a Dollar General-Family Dollar merger makes sense, and the higher bid offer from Dollar General confirms that, but wait and buy once the momentum settles.
- Dollar General is willing to pay $9.7 billion to buy up Family Dollar.
- We are still long-term bulls of Dollar General and believe this is the best option for Family Dollar shareholders.
- We didn't anticipate Dollar General coming in with a bid that would top Dollar Tree and believe the risk might be greater than the reward.
Update: Dollar General Makes An Acquisition Bid For Family Dollar Stores
- Dollar General bids $78.50 per share for Family Dollar, topping Dollar Tree’s $74.50.
- This event lowers my bullishness on Dollar Tree.
- Though many saw it coming, it actually surprised me.
Update: Dollar General Tops Dollar Tree Bid For Family Dollar
- DG has announced a bid for FDO topping DLTR's previous bid.
- In a recent article I suggested buying DG.
- Investors who bought DG should consider selling to lock in gains.
Dollar General: All-Cash Bid For Family Dollar Highlights Significant Synergies
- This morning, Dollar General announced a $78.50 per share all-cash deal to buy Family Dollar Stores.
- Dollar General expects synergies that could be twice the amount of those at a merged Dollar Tree/Family Dollar Stores company.
- Family Dollar's committed financing, all-cash offer and synergy advantage should make the company the right partner for Family Dollar Stores even if a higher deal consideration is required.
- Dollar General is a large, stable business that generates a lot of cash.
- Hundreds of millions of dollars in share repurchases haven't resulted in a higher valuation multiple.
- Even a modest payout ratio would result in a meaningful dividend, which may cause multiple expansion as well.
Ignore The Discount Retail Merger Hype And Just Buy Dollar General
- Ignore the hype about the Dollar Tree-Family Dollar merger; Dollar General is where you want to be.
- Dollar General is the leader of the discount retailers and it has the financials to back it up.
- With only a few controllable risk factors to consider, this well-oiled machine is set to break out.
- Dividends be darned, still make out like a bandit with a near 12% shareholder yield.
Wed, Nov. 19, 3:28 PM
- Dollar General (DG) says it remains committed to a plan to acquire Family Dollar Stores.
- The company say discussions with the FTC over the amount of stores that would need to be divested to push a deal through are still ongoing.
- Previously: FTC may require Dollar General to divest 4K+ stores, Decision time in dollar store space
Wed, Nov. 19, 12:38 PM
- Family Dollar (FDO -1.1%) pushes back the date that shareholders will vote on the proposed merger with Dollar Tree (DLTR +0.2%) to December 23.
- The company expects to have an update by the end of the first week in December on a FTC review of the combination.
- The development doesn't give Dollar General (DG -3.5%) much time to decide if it will raise its offer for Family Dollar amid reports more stores than anticipated will need to be divested to clear regulatory hurdles.
- Previously: FTC may require Dollar General to divest 4K+ stores
Wed, Nov. 19, 5:13 AM
- Dollar General (NYSE:DG) may have to divest more than 4,000 stores, more than double the 1,500 stores it said it was willing to sell, if it wants to gain regulatory approval to buy Family Dollar (NYSE:FDO), reports The New York Post.
- Getting the FTC to change its mind could take months, but rival Dollar Tree (NASDAQ:DLTR) wants a vote on its proposed Family Dollar merger by Dec. 31.
- Without the time to explain its case to the FTC, Dollar General could be forced to either raise its bid or live with the added number of divestitures.
- DG -1.8% premarket
Fri, Nov. 14, 10:20 AM| 1 Comment
Fri, Oct. 31, 2:51 PM
- Dollar General (DG +0.2%) extends its tender offer for shares of Family Dollar (FDO +0.4%) until December 31.
- The original tender expired today with only a small portion of FDO shares ending up in the hands of Dollar General.
- The extension pushes the decision for Family Dollar shareholders past a special meeting set for December 11 to vote on the lower Dollar Tree (DLTR +1.7%) acquisition offer.
- FDO trades at $78.15 vs. the $74.50 DLTR offer and $80.00 DG bid.
Tue, Oct. 28, 11:32 AM
- Redbook notes the timing of Halloween on a Friday is giving a boost to merchandise sales related to the holiday as more consumers prep for parties and celebrations.
- Both Redbook and ICSC's weekly read on retail store sales showed year-over-year improvement with Halloween sales a factor.
- Stores have also been extending their hours to draw in more shoppers.
- Looking for a Halloween boost: DLTR, DG, FDO, KR, SVU, SWY, WMT, TGT, HSY, KRFT, CVS, RAD, WAG, MDLZ.
Fri, Oct. 17, 4:25 PM
- Elliott Management, a veteran of many activist campaigns, says it has a 4.9% stake in Family Dollar (NYSE:FDO), and (in an open letter) urges management to provide Dollar General (NYSE:DG) with "an even playing field in its continuing efforts to acquire the Company at price levels that are clearly superior" to that provided by FDO's current deal with Dollar Tree (NASDAQ:DLTR).
- Elliott asserts FDO was "in a position earlier this year to facilitate a bidding war between two large, well-capitalized strategic acquirers, " and that its board "could have and should have engaged with Dollar General in order to gain a better understanding of their pricing architecture in aid of a more comprehensive anti-trust analysis."
- Proxy war: Elliott has nominated 7 directors to FDO's board to "preserve our ability to seek to elect directors at the 2015 Annual Meeting who are both qualified and committed to achieving a value maximizing outcome for shareholders."
- Though Dollar General is offering $600M more for Family Dollar than Dollar Tree, regulatory scrutiny of its bid is already intense: The FTC sent a second request for info last week.
- FDO +1% AH. DG +0.5%. DLTR -0.5%.
Wed, Oct. 15, 12:58 PM
- Top Wal-Mart (WMT -2.3%) U.S. exec Greg Folan announced the company will open between 180 and 200 Neighborhood Markets stores during its next fiscal year.
- The expansion plan for the concept is smaller than the forecast for 270 to 300 NM stores to be opened this fiscal year.
- Neighborhood Markets has had a stronger impact on the dollar store group (FDO, DG, DLTR) than grocery stores so far, according to analysts.
- Highlights from Wal-Mart's investor day
- Wal-Mart investor meeting webcast
Tue, Oct. 14, 3:31 PM
- Global growth, foreign-exchange, oil, and small caps are the subject of every client inquiry, says David Kostin. His team's recommendation: Buy "American exceptionalism."
- In Kostin's view, U.S. economy and corporate fundamentals are still strong, with economic growth expected by Goldman economists to be 3.2% next year, the fastest expansion since 2005. Europe is expected to grow just 1%.
- What his team likes are those stocks of companies which have a high proportion of domestic sales, plus sectors like Consumer Staples (XLP -0.1%) and Discretionary (XLY +0.7%) which stand to benefit from lower oil prices (plunging again today).
- As for small caps (IWM +0.9%), Kostin is wary, noting downward earnings revisions have boosted small cap P/E ratios even as prices have declined.
- The list of S&P 500 names capturing two or more of Kostin's themes: GT, GM, PCLN, AMZN, CMCSA, LOW, DG, TSN, ADM, CVS, AVP, WAG, PXD, HAL, JPM, BAC, SCHW, PNC, MS, C, GNW, LNC, MET, THC, AET, UNH, ESRX, HUM, WLP, BIIB, GILD, DAL, CMI, FLR, CRM, JBL, MA, FB, MU, FSLR, VMC, MON, T.
Fri, Oct. 10, 5:31 PM
- The FTC has issued a second request for additional info to Dollar General (NYSE:DG) regarding its $9.1B buyout offer for Family Dollar (NYSE:FDO). State AGs have already been probing the bid on antitrust grounds.
- DG -1.2% AH. For now, Family Dollar continues supporting Dollar Tree's (NASDAQ:DLTR) $8.5B offer.
Mon, Sep. 29, 2:50 PM
- Deutsche Bank thinks Dollar Tree (DLTR +0.6%) and Dollar General (DG -0.3%) could be prepping to make fresh bids for Family Dollar Stores (FDO).
- The investment firm is sticking with its Buy rating on FDO amid the potential for new action.
- What to watch: State AGs are reportedly looking at bids from Dollar General and Dollar Tree for FDO. It's possible the new offers from the discounters could involve a plan to divest more stores in front of the merger to appease regulators.
Wed, Sep. 24, 8:13 AM
- Retail sales could increase by 4.5% to $986B this holiday season on an improved macroeconomic backdrop, forecasts Deloitte Touche.
- The mark would easily top last year's 2.8% rise.
- Online sales are tipped to rise by 14%.
- Promotional activity across broad retail has been dialed back a touch during the back-to-school season, but is still a risk to margins heading into the crucial shopping period.
- What to watch: This holiday season could be an operational pressure cooker for UPS (NYSE:UPS) and FedEx (NYSE:FDX) with demand expected to be high.
- Related stocks: AAP, AEO, ANF, BBBY, BBY, BJ, CHS, COH, COST, DG, FDO, FL, GPS, JCP, JNY, JWN, KSS, LB, LULU, M, NDN, PIR, RL, TGT, TIF, TJX, UA, URBN, VFC, WMT, ZLC, PERY, SQBG, VNCE, KORS, GIII, KATE, GIL, VRA, ICON, PSMT, AMZN.
- Related ETFs: XLY, XRT, VCR, RTH, RETL, IYK, FXD, FDIS, PMR, UGE, RCD, SZK
Tue, Sep. 23, 8:10 AM
- Halloween spending by consumers in the U.S. is expected to rise to $11.3B this year, according to an estimate from ICSC.
- Discount stores (DG, DLTR, FDO) and grocery stores (KR, SVU, SWY, WMT, TGT) are expected to keep a lion's share of the costume spend with shoppers indicating price and the ability to touch costumes as the biggest factors in deciding where to shop.
- Halloween is one of the few calendar events where online has stayed more of a bit player with only an estimated 7% share of purchases.
Wed, Sep. 17, 9:07 AM
- Family Dollar (NYSE:FDO) recommends shareholders pass on the tender offer of Dollar General (NYSE:DG) as it continues to throw its support behind a merger with Dollar Tree (NASDAQ:DLTR) which it sees as more likely to clear regulatory hurdles.
- The company maintains the $80-per-share offer from Dollar General is "highly conditional" and illusory in nature.
Fri, Sep. 12, 2:02 PM
- Wal-Mart (WMT -0.5%) plans to rebrand all of its Express stores to Neighborhood Market in a move that signals a stronger push into grocery.
- The new strategy means that Neighborhood Market stores will range in size from 15K to 40K square feet.
- The company is still testing the smaller Walmart To Go and Walmart On Campus concepts.
- What to watch: Though there's plenty of retail chains which could be impacted by Wal-Mart's NM push, Gilford Securities reasons that dollar stores (FDO, DLTR, DG) and drugstores (RAD, CVS, WAG) top the list.
Fri, Sep. 12, 7:36 AM
- Dollar General (NYSE:DG) expects to receive feedback from regulators by the middle of October on its proposed merger with Family Dollar.
- A decision to go "hell or high water" with a final offer will be made by the retailer at that point, sources tell The New York Post.
- Dollar General's hostile tender offer is at $80 per Family Dollar share.
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