Family Dollar Approves Dollar Tree Merger

Family Dollar stockholders voted to merge with Dollar Tree last week, ending a months long bidding war over the U.S.'s second largest dollar store chain.Of the 89% of the company's total shares that were represented, 74% of the votes were cast in favor of the merger. The deal is expected to close by March. "We are pleased with the outcome of today’s vote, and I want to thank Family Dollar stockholders for their support throughout this process,” Family Dollar chief executive officer Howard Levine said in a media release. "We look forward to completing the transaction with Dollar Tree and remain excited about the opportunity that this combination will create for our stockholders, team members, customers and other stakeholders."Dollar Tree first agreed to buy Family Dollar for $9.5 billion in August 2014, but channel leader Dollar General responded to the deal with a higher offer of $9.7 billion. (See Related Articles.) While Family Dollar's board of directors reaffirmed their support of the Dollar Tree deal, the stockholders meeting was postponed until the Federal Trade Commission could rule on how many stores both Dollar Tree and Dollar General would have to divest if they merged with Family Dollar.The FTC concluded in January that it could require Dollar General to close between 3,500 and 4,000 stores, while Dollar Tree would only be required to shutter 310 locations. Dollar General had said it would be willing to close 1,500 stores to acquire Family Dollar, while Dollar Tree had initially agreed to close up to 500. When Dollar General entered the mix, Dollar Tree removed that limit and promised to meet whatever divestiture terms the FTC laid out.Dollar General disputed the FTC's January ruling and planned to work with the agency on additional analysis that was expected to be completed on Feb. 10. However, Dollar Tree ceo Bob Sasser would not agree to further delay the transaction. "It is imperative that the shareholder vote on the merger be held on Jan. 22, both to eliminate the uncertainty that is continuing to damage Family Dollar’s business and because Dollar Tree’s financing costs go up substantially after that date," Sasser wrote in a letter to Levine. "Dollar Tree is not willing to agree to any further adjournments of the shareholder meeting. After two delays, we have been more than reasonable but have reached the end of our patience."Dollar General ceo Rick Dreiling expressed his disappointment with the news in a media release. “Today’s vote is a loss not only for Family Dollar shareholders, but also for consumers across the country who will not have the opportunity to benefit from the cost savings and efficiencies that we believe would have been created by a merger between Dollar General and Family Dollar. As we have said throughout this process, the scale of this combination would have provided better value and greater selection to customers of both Dollar General and Family Dollar. Despite our best efforts over the past few months, Family Dollar’s lack of engagement and a contracted transaction timeline ultimately prevented us from completing this transaction.”Dreiling announced last June that he would retire by May of this year, but would stay on to lead the combined company until May 2016 should the merger with Family Dollar go through. He now says that he will continue in his current role until January 29, 2016, stepping down earlier if a successor is appointed.

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