Family Dollar Stores Inc. shareholders approved an $8.74 billion takeover offer from Dollar Tree Inc. after a six-month battle, spurning a higher offer from Dollar General Corp. that they considered too risky.
The vote was announced at an investor meeting in Charlotte, N.C., on Thursday morning. Family Dollar’s management had argued that Dollar Tree’s $76.44-a-share offer was more likely to win regulators’ approval than Dollar General’s $80-a- share bid.
Dollar Tree’s purchase of Family Dollar, which still needs a signoff from the Federal Trade Commission, would create the largest U.S. dollar-store chain, with about 12,000 locations. Dollar General had sought to keep its status as the category’s biggest operator with its own bid but failed to convince shareholders that it would win approval from the FTC.
“It’s a terrific outcome, even though it was painful getting here,” Family Dollar CEO Howard Levine, whose family founded the company, said at the meeting.
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Dollar General more closely competes with Family Dollar, meaning its proposal faced greater scrutiny and may have required the combined company to sell more locations. As part of its acquisition proposal, Dollar General agreed to divest 1,500 locations, a number Dollar Tree said was unrealistically low. Dollar Tree said its own bid would require selling fewer than 300 locations.
Speculation that Dollar Tree would prevail increased last week when Institutional Shareholder Services Inc., an influential proxy adviser for large investors, recommended accepting the offer because of its “near certainty” of closing. ISS also said that Dollar General’s “near-silence” on the regulatory process raised concerns. Dollar General, based in Goodlettsville, Tenn., said it needed more time to get the FTC to approve its deal.
Under the terms of the Dollar Tree deal, Family Dollar locations will keep their name and Levine will run them.
Family Dollar’s results have deteriorated during the takeover battle, which began with Dollar Tree’s offer in July. Profit fell 47 percent in the quarter ended Nov. 29, and same-store sales declined in four of the past five quarters. The chain operates about 8,000 stores and generated $10.5 billion in sales in the past year.