Dollar General to continue bid for Family Dollar

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By Jacqueline Renfrow 

Dollar General (NYSE:DG) announced it would continue its bid for Family Dollar (NYSE:FDO) after reporting a 2 percent increase in second quarter income.

The retailer said an increase in shoppers and shopper spending brought the chain’s net income to $251 million.

Sales for the second quarter totaled $4.7 billion, up 7.5 percent percent from a year ago.

Earlier this month, Dollar General’s $9.7 million takeover bid was rejected by Family Dollar, but CEO and chairman Rick Dreiling said the push for a deal will continue.

“In regards to our proposal to acquire Family Dollar, we remain firmly committed to the acquisition,” Dreiling said in the quarterly statement. “The financial benefits of our offer to Family Dollar shareholders are indisputable, and the proposed combination would unlock tremendous value for Dollar General shareholders. We continue to believe the potential antitrust issues are manageable and that our transaction as proposed is both superior and achievable.”

Family Dollar’s board said the original bid was rejected because of antitrust issues, even though Dollar General agreed to close 700 stores to appease regulators.

Family Dollar originally accepted an $8.5 million bid by Dollar Tree (NASDAQ:DLTR) in July. Ousted CEO and large stakeholder Carl Icahn had pushed Family Dollar to put the stores on sale in June. Family Dollar has had a rough fiscal year that included cutting jobs and closing 370 underperforming stores.

Combined, Dollar General and Family Dollar would own more than 19,000 locations, trumping Dollar Tree’s 5,000 locations, reported USA Today.

Dollar General also reported a 2.1 percent rise in same-store sales this past quarter, increased by higher transaction values and customer traffic. Other contributors to an increase in sales included new stores, tobacco products, perishables, and snacks such as candy.

The retailer predicts total sales to increase 8 to 9 percent in fiscal 2014, with same-store sales increasing 3 to 3.5 percent.

Dreiling recently announced he would retire from his position as CEO in May or upon the appointment of a replacement.

For more:
-See this Dollar General press release
-See this USA Today article

Related stories:
Family Dollar adopts poison pill to fight off Icahn
Family Dollar to close 370 stores amid plummeting earnings
Family Dollar expands food assortment, lowers prices
Family Dollar COO Michael Bloom exits, Jason Reiser promoted to EVP, CMO
Family Dollar’s earnings spike represents Dollar Stores’ growth

Read more about: Family DollarDollar General

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