Dollar General may close 4,000 stores while Family Dollar delays shareholder meeting

Dollar General (NYSE:DG) announced it is still in talks with the U.S. Federal Trade Commission over the number of stores it will have to sell in order to acquire Family Dollar (NYSE:FDO). Although the discount chain has already accepted a lower offer from Dollar Tree (NASDAQ:DLTR), Family Dollar also announced a postponement of its shareholders' meeting from Dec. 11 to Dec. 23.

Family Dollar is hoping that it will have an update from the FTC, in time for the holidays, about whether or not a merger with Dollar Tree would violate anti-trust rules, reported Reuters.

Simultaneously, Dollar General may have to close more than 4,000 stores in order for the deal to be approved or forced to raise its latest bid of $80 per share. Originally the company offered to close 1,500 stores to gain regulatory approval by Family Dollar.

"The question is whether the [vastly increased] number of divestitures will allow [Dollar General's] deal to work financially," a source close to the situation told the New York Post.

The process to convince the FTC to approve the merger of two rivals could take as long as six months, in the meantime forcing Dollar General to either raise its bid or give up on the merger once and for all. Currently, the two chains operate a total of 20,000 stores combined.

In a separate statement, Dollar General said that it was still committed to acquiring Family Dollar, reported the Associated Press. In July, Dollar Tree agreed to buy Family Dollar for $8.5 billion. Dollar General then put in a counter bid of $9.1 billion, but the board rejected the offer. Eventually Dollar General took its offer directly to Family Dollar shareholders, but this also did little to change the standings. The board stated that the offer, as with the first bid made on Sept. 2, was rejected based on antitrust regulatory considerations.

For more:
-See this Reuters article
-See this New York Post article
-See this Associated Press article

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