Discounters Vying for Family Dollar Provide FTC Updates

Dollar Tree and Dollar General, the competing companies vying to acquire Family Dollar Stores, both issued statements today regarding the Federal Trade Commission's (FTC) review of each of their potential transactions with the Matthews, N.C.-based discounter.

Noting that Dollar Tree and Dollar General represent "different retailers with complementary business models," Dollar Tree stated that the FTC will likely require no more divestures than what was originally required per the companies' original $8.5 billion merger deal on July 27, 2014.

Dollar Tree further noted that the divestures will not have a "material impact on its plans for the combined organization," and that the pending merger could be completed as early as February 2015.

Regarding Dollar General's continued attempt to derail the merger with counter offers, Dollar Tree said that the FTC would likely require divestitures exceeding the 1,500 stores that Dollar General originally offered to divest, rendering the deal with Dollar Tree far superior.

The retailer noted that while roughly 150 Family Dollar stores adjust prices due at least in part to the presence of Dollar Tree, about 5,400 Family Dollar stores adjust prices due at least in part to the presence of Dollar General.

Similarly, fewer than 50 Family Dollar stores are in zones where prices could rise by more than 2 percent on average under Family Dollar’s pricing rules in the absence of a Dollar Tree. By contrast, more than 3,300 Family Dollar stores are in zones where prices would rise by more than 2 percent on average under Family Dollar’s pricing rules in the absence of a Dollar General.

In response, Dollar General indicated its data tells a "very different story," stressing that Walmart, rather than Family Dollar, is the primary driver regarding Dollar General’s strategic pricing decisions, and more than 90 percent of Dollar General’s SKUs are nationally priced and not subject to zone pricing.

Dollar General confirmed that it is continuing discussions with the FTC regarding the extent of divestures required should Family Dollar green light its more than $9 billion merger offer, first proposed in August of this year.

Family Dollar shareholders are slated to vote on the pending merger on Dec. 23.