WordPress.com



Rival Bids for Family Dollar Stores as Retailers Fight to Sell to Working PoorBy?Michael J. De La Merced?and?Nelson D. Schwartz, NYT, ?AUGUST 18, 2014 6:39As more struggling Americans hit the bargain bins to get by, a bidding war is brewing for one of the country’s biggest deep-discount retailers.The latest move came on Monday, when?Dollar General?offered to buy?Family Dollar Stores?for $8.9 billion, hoping not only to break up an?agreed-to merger with its rival Dollar Tree?but also to strengthen its share of the low-end retail market as traditional retailers like?Walmart?try to move onto its turf.right-368300Prices at Family Dollar are kept low and its breadth of products is limited to items it can sell cheaply. But the retailer’s success has become a symbol of the rush to cater to the working poor. Despite a flurry of official signs that the economy is improving — unemployment benefit claims are down, the stock market has been surging since 2008 — the recovery continues to elude many middle-class Americans. As a result, many are hunting for rock-bottom discounts for their shopping needs.2286000156845Together with Family Dollar,?Dollar General would have almost 20,000 stores and more than $28 billion in revenue. Credit?Eric Gay/Associated Press00Together with Family Dollar,?Dollar General would have almost 20,000 stores and more than $28 billion in revenue. Credit?Eric Gay/Associated PressOver the last decade, the weekly income for the median percentile of American workers has risen 22%, according to Guy Berger, an economist with RBS Securities. Though initially impressive, that represents a 3.1% decline once inflation is factored in.By contrast, weekly earnings for workers in the 90th percentile rose 31% during that same time, meaning a 4.1% gain after inflation. And while financial assets like stocks have been surging in recent years, most households have not benefited from the upswing because they have relatively small nest eggs. That means the so-called wealth effect, or the ability to spend more as assets rise in value, is restricted to a smaller group of consumers. For example, 94% of American households have financial assets like a checking account or retirement fund, Mr. Berger said. But the median value of those holdings is about $21,500.“The biggest change from five years ago is that people are less worried about losing their jobs,” he said. “But in some ways, they are worse off than they were 10 years ago, and that’s encouraging people to downsize their spending.”It is a view shared by Richard W. Dreiling, Dollar General’s chairman and CEO. “It’s fair to say that the economy is creating more of our core customers,” he said. “The middle-income customer is getting squeezed.”That has inspired Dollar General and Dollar Tree to expand their empires by pursuing Family Dollar, which started out selling household goods for a dollar more than five decades ago. Now many of its items — like food products, underwear and home décor — cost a bit more, though they are still heavily discounted.right000Bulking up via a merger would give either suitor more power to negotiate discounts with suppliers and cut costs further. Dollar General had long believed that a merger with Family Dollar made sense, with Mr. Dreiling periodically approaching his company’s rival over recent years. And shareholders had long considered a merger all but inevitable. In disclosing a 9.4% position and urging a sale, the billionaire?Carl C. Icahn?suggested Dollar General as a potential buyer. Still, none of Mr. Dreiling’s inquiries prompted substantive merger talks, leading him in late June to announce plans to retire. “Either I missed something, or something wasn’t thrown my way,” he said.What he did not know was that Family Dollar had begun merger talks with Dollar Tree in March. So he was caught off guard when Family Dollar announced an $8.5 billion sale to Dollar Tree last month, a deal that would create a retailer that would surpass Dollar General in size and regional reach.For Mr. Dreiling, that announcement was like a shot of adrenaline, making a counterbid more crucial than ever. Such was the importance of pursuing a deal that he postponed his retirement plans by a year, to May 2016, to help manage the combined company should there be a deal. Dollar General has also offered to pay the $305 million breakup fee that would be owed to Dollar Tree if its deal with Family Dollar were to fall apart.Mr. Icahn also weighed in, accusing Family Dollar’s board of not fully exploring all of its potential sale options and of protecting its chief executive, who might not have a job if Dollar General succeeds. “How far will crony boards go (and get away with it legally) to protect the C.E.O. at the expense of shareholders?” he wrote in a blog post on Monday.521208017526000Uniting Dollar General and Family Dollar would create a huge retailer in the deep-discount market. Together, the two would have almost 20,000 stores and more than $28 billion in revenue.Bulking up could also better defend Dollar General against Walmart’s efforts to move beyond its bigger-is-better model and into the smaller-store format used by the dollar stores. Comparable-store sales at Walmart’s smaller locations rose during its second quarter, while those at traditional supercenters fell slightly.The fight over Family Dollar “confirms that small-box retailing is the fastest-growing segment of an otherwise slow-growth/no-growth retail store environment,” Craig Johnson, president of the consulting firm Customer Growth Partners, wrote in an email.Dollar General argued that combining with Family Dollar would not be opposed by regulators, since retailers like Walmart and ?are moving into the discount space. Still, Mr. Dreiling said he would be willing to sell up to 700 stores if needed.521208049403000Analysts and investors have also said that Family Dollar, which is run by the son of the company founder, Leon Levine, could benefit from the addition of a new management team. Under Mr. Dreiling, Dollar General bolstered its sales as it opened more locations and held down costs.By contrast, Family Dollar came under pressure in recent years from a number of activist investors dissatisfied with its financial performance. The hedge fund manager Nelson Peltz, who gained a board seat nearly three years ago after failing to take over the entire company, criticized management recently. And Mr. Icahn demanded seats on the board and a plan to explore a sale of itself.The two stores have fairly similar strategies, selling products at range of prices starting at a dollar, though Dollar General focuses on largely rural areas and Family Dollar is concentrated in urban regions. Dollar Tree aims largely at the suburbs and a more middle-class customer base.Family Dollar said in a statement that it was reviewing the Dollar General bid, but had not changed its recommendation that investors support the merger with Dollar Tree. A Dollar Tree spokesman declined to comment.Many investors were thrilled by the prospect of a bidding war. Shares in Family Dollar rose nearly 5% on Monday, to $79.81, while those in Dollar General soared almost 12%, to $64.14. Only Dollar Tree shares fell, by 2.4% to $54.26, as shareholders appeared worried that it might overpay if it had to raise its offer to win.Dollar General Ups Bid for Family Dollar, Threatens to go HostilePublished September 02, 2014, Reutersright22860000Dollar General Corp raised its bid for Family Dollar Stores Inc to $80 per share, or $9.1 billion, and warned it may turn hostile and appeal directly to shareholders if the new offer was rejected.The No.1 U.S. deep-discount retailer also said it would pay a break-up fee of $500 million if the deal ran foul of competition law, the reason Family Dollar had cited for its rejection of the earlier $8.95 billion offer.Family Dollar opted instead for an $8.5 billion cash-and-stock bid from Dollar Tree Inc.Family Dollar's shares were up almost 1% at $80.52 in premarket trading on Tuesday, above Dollar General's offer, suggesting investors held hopes of higher offers. Shares of Dollar General, which increased its all-cash offer by 2%, were up 2.3%."In the event you refuse to engage with us regarding our revised proposal, we will consider taking our persuasive and superior proposal directly to your shareholders," Dollar General Chief Executive Rick Dreiling said in a letter to Family Dollar's board on Tuesday.Dollar General also said it was willing to sell up to 1,500 stores to clear the antitrust review, up from the 700 it had proposed earlier. The company said it hired Richard Feinstein, a former director of the Bureau of Competition at the Federal Trade Commission, to further "validate its antitrust analysis". Playing down antitrust concerns, Dollar General said its documents would show that the products it offers are not unique as they are also available at most mass retailers, drug and grocery stores. It also said that Wal-Mart Stores Inc, and not Family Dollar, was the primary driver for the company's pricing decisions.Dollar General and Family Dollar offer goods at multiple price points, while Dollar Tree sticks to a $1 or less format.The Dollar Tree bid is friendlier to Family Dollar's management. CEO Howard Levine, son of Family Dollar's founder, would remain CEO of the Matthews, North Carolina-based company were it bought by Dollar Tree. If Dollar General succeeds in buying Family Dollar, Levine is widely expected to lose his job, although this has not been confirmed.Dollar General’s Next Move After Family Dollar’s RejectionBy?STEVEN DAVIDOFF SOLOMON, NYT Dealbook SEPTEMBER 5, 2014 No deal. Family Dollar’s?rejection of Dollar General’s revised $9.1 billion bid?is not just a rejection of Dollar General’s latest offer. Family Dollar is setting up an argument that Dollar General can never satisfy the Family Dollar board. On Friday, the Family Dollar board cited the “very real and material risk that the transaction proposed by Dollar General” in unanimously rejecting the Dollar General bid.Rejection happens all the time in takeovers, but what makes this so unusual is that Family Dollar has now twice rejected a Dollar General bid that would pay more than the Dollar Tree transaction. (Dollar Tree has offered $8.5 billion.) The reason for this in both cases is the Family Dollar’s board belief that the antitrust risk posed by such a deal is too great, and that Dollar General has not done enough in its proposal to ameliorate this risk.In its first bid, Dollar General had proposed that it divest up to 750 stores. After that bid was rejected, Dollar General proposed that it would divest up to 1,500 stores and also pay Family Dollar a reverse termination fee of $500 million if the transaction was rejected by the antitrust authorities.This was not enough for Family Dollar’s board.Still, there are rejections and then there are rejections. Family Dollar and Dollar General can be seen to be bargaining right now through public proposals and rejections. In its latest rejection, Family Dollar could have taken the opportunity to detail how Dollar General could satisfy Family Dollar’s board that it had solved the antitrust risk problem.But if you read?the news release, there is little to give Dollar General hope that it can do anything to satisfy Family Dollar. The release speaks of the need to “eliminate” all risk. And the perceived risk here appears to be large from Family Dollar’s perspective. The news release notes that of the 20,000 stores owned by the two companies, 6,000 Family Dollar stores are within three miles of a Dollar General store. Family Dollar cites its discussions with the Federal Trade Commission over what the market is. It also tries to rebut the argument that Walmart is a natural competitor to a combined Family Dollar-Dollar General that would prevent prices from rising by stating that many overlapping stores do not have a Walmart nearby.(By the way, if you are a customer of Family Dollar, you will be less than happy to know that Family Dollar admits that its prices are higher in places where there are no Dollar General stores – another argument for why this deal would lessen competition and not go through.)Raising the ante, Dollar Tree has offered to divest an unlimited number of stores. This is an easy option for Dollar Tree because there is less overlap in Family Dollar and Dollar Tree stores, and despite the annoyingly familiar names, the two are in arguably different businesses. Dollar Tree is a true dollar store, where everything is a dollar. But Family Dollar and Dollar General are $10 or less stores where families shop for fill-in groceries and other items. Whether that truly is a distinction, it does give Dollar Tree more grounds to make the argument with the Federal Trade Commission.Even if Dollar Tree is not giving up much with its store divesting offer, OK? it puts Dollar Tree in the position of arguing that if Dollar General’s bid is accepted by the Family Dollar board, Dollar General, too, must eliminate all antitrust risk. And so, we are left with a news release that appears to be saying that no deal is possible. In truth, Family Dollar is also limited in what it can say about what could work by its acquisition agreement with Dollar Tree. That agreement requires Family Dollar to endorse the Dollar Tree deal unless it finds the Dollar General proposal superior.This doesn’t end the matter. Dollar General was quick to issue a news release saying it “remains committed” to acquiring Family Dollar and is studying its “next steps.” If Dollar General remains committed, it can offer up a true “hell or high water” provision, which will commit the company to doing whatever it takes to complete the deal. This is what Dollar Tree is trying to do to goad Dollar General with its own offer to give up stores. After all, if Dollar General does offer a “hell or high water” provision, it may end up divesting thousands and thousands of stores that Dollar Tree can get cheaply. Family Dollar is happy to go along, since its shareholders will get the money no matter what.But this is tough medicine and risky for Dollar General as it may leave the retailer at the mercy of the antitrust regulators, who, knowing about the “hell or high water” provision, will demand huge divestitures. So absent this move or another offer in the middle, Dollar General’s next step then would be to take its arguments to the streets and try and get Family Dollar shareholders to reject the Dollar Tree bid.What we will see here are arguments that unfolded when Avis and Hertz got into a bidding war over Dollar Thrifty. (Yes. There are too many dollar companies out there.) In that deal, Dollar Thrifty shareholders?voted against?the Hertz deal while a competing Avis deal with more antitrust risk was pending. Dollar Thrifty?asked its shareholders?to take the easier bird in the hand bid from Hertz over the antitrust risk from Avis. Dollar Thrifty’s shareholders eventually went along, and though it took a few years, Hertz eventually acquired Dollar Thrifty.Of course, Family Dollar shareholders could be left with nothing if Dollar General is blocked by the government and Dollar Tree moves on. The momentum is on the Family Dollar side because of this and the fact that most institutional shareholders, the majority owners of Family Dollar stock, don’t like to take excessive risk. Indeed, even the activist investor Carl Icahn has moved on, completely selling his stake.Still there is the Dollar Thrifty precedent. And there is the chance of forcing Dollar Tree to pay more to push the deal through. In this vein, I’d expect Dollar General to take a half measure in the continuing dollar wars – perhaps offering up even more divestitures and if (as is likely) it doesn’t convince the Family Dollar board, taking that proposal to shareholders.In this view, the Family Dollar news release is also the beginning of this battle. Family Dollar goes out of its way to outline all of the reasons it believes this deal does not make sense from an antitrust perspective. It is remarkable transparency but that will be needed if Dollar General does indeed respond.So if you are a Family Dollar shareholder, perhaps it is time to start reading up on antitrust law. You may have a hard decision to make.Dollar General Makes Hostile Bid for Family DollarBy?DAVID GELLES, NYT, SEPTEMBER 10, 2014 12:25 right-2921000Family Dollar has been adamant that it is sticking with its deal with Dollar Tree.Dollar General?said on Wednesday that it was taking its $9.1 billion offer for?Family Dollar?directly to shareholders.The move further complicates Family Dollar’s agreed upon deal to sell itself to?Dollar Tree?for $8.5 billion.In?a statement, Dollar General said it was offering to acquire all of Family Dollar’s shares for $80 each.That is a superior price to Dollar Tree’s existing offer of $74.50 a share. But Family Dollar rejected a friendly offer of $80 a share from Dollar General last week, contending that the deal it had reached with Dollar Tree had a better chance of passing muster with antitrust regulators.But the hostile offer is most likely to, at the very least, delay any deal between Family Dollar and Dollar Tree. And if Family Dollar shareholders disagree with their board, it could result in a Dollar General victory.“Our offer provides Family Dollar shareholders with significantly greater value than the existing agreement with Dollar Tree as well as immediate and certain liquidity for their shares,” Dollar General’s chief executive, Rick Dreiling, said in the statement. “By taking this step, we are providing all Family Dollar shareholders a voice in this process, and we urge them to tender into our offer.”Dollar General was caught off guard when Family Dollar, a company it had long sought to acquire, agreed to sell itself to Dollar Tree this summer. Complaining that it was not given a fair chance to bid, Dollar General suggested the decision not to engage in talks was motivated in part by the Family Dollar chief executive’s concerns about his job.But the board of Family Dollar, which includes Edward P. Garden, the chief investment officer of the hedge fund Trian Fund Management, has made it clear which deal it prefers. (Mr. Garden’s endorsement of the deal with Dollar Tree is notable because Trian is one of the biggest Family Dollar shareholders, and is looking to sell its shares at the highest possible price.)Family Dollar Acquisition TimelineDateActionPricePremium over Pre-BidJul. 25Family Dollar's Pre-Bid Price$60.660%Jul. 28Dollar Tree Bid$74.5022.8%Aug. 18Dollar General Failed Bid$78.5029.4%Sep. 2Dollar General Failed Bid 2$80.0031.9%Sep. 10Dollar General Goes Hostile$80.0031.9%Last week, Family Dollar and Dollar Tree went so far as to include a “hell or high water” clause, pledging to do whatever is necessary to clear the deal with regulators.Dollar General has said it would sell up to 1,500 stores to win antitrust approval. It also committed to pay a $500 million reverse break fee if its deal does not close, but it has not yet offered to include a “hell or high water” clause.By initiating the tender offer, however, Dollar General can begin discussions with the Federal Trade Commission about what divestitures might be needed for a deal to gain approval.“Additionally, we now can begin the antitrust review process and will have an opportunity to present our position directly to the F.T.C.,” Mr. Dreiling said. “As we previously have stated, we are confident in the results of our antitrust analysis, and we look forward to a constructive dialogue with the F.T.C.”Dollar Tree and Family Dollar did not immediately comment on Dollar General’s action.Goldman Sachs is advising Dollar General and Simpson Thacher & Bartlett is providing legal advice.Bloomberg Video Analysis:Timeline for the pursuit of Family DollarBloomberg TV analysis of whether there are real antitrust issues – Wal-Mart as the wildcardDollar General Goes HostileThe battle highlights low end consumer expansionIs the CEO trying to protect his job?Which Deal Makes More Sense?Dollar General Benefits Most From A Family Dollar Buyout... But Can It Afford It?Daniel Jones, , Aug. 18, 2014 3:43 PM ET340614030480SummaryOn August 18, Dollar General offered to buy Family Dollar for $78.50, 5% above the purchase price offered by Dollar Tree, sending the company's shares soaring.Based on the data provided, Dollar General stands to benefit most from the transaction, which is expected to unlock a great deal of value for shareholders.However, it's Dollar Tree, not Dollar General, that is better positioned to make a deal go through.00SummaryOn August 18, Dollar General offered to buy Family Dollar for $78.50, 5% above the purchase price offered by Dollar Tree, sending the company's shares soaring.Based on the data provided, Dollar General stands to benefit most from the transaction, which is expected to unlock a great deal of value for shareholders.However, it's Dollar Tree, not Dollar General, that is better positioned to make a deal go through.August 18 was a great day to own shares of?Family Dollar. After news broke in the morning that?Dollar General?offered to buy?the business for $78.50 per share in an all-cash transaction, valuing it at $8.95 billion. While this represents a significant premium over the $74.50 per share (cash and stock)?proposed by?Dollar Tree?, shares of the discount retailer soared to as high as $80.90, a new 52-week high for the business, an indication by Mr. Market that even higher bids might be justified. Although this is a possibility, there's no telling who will end up winning the bidding war. Currently, Dollar General has a greater incentive to conduct a buyout, but Dollar Tree might be better positioned to make a deal happen.Dollar General benefits most from a buyoutRevenue/Square Foot20132012201120102009Dollar General$220$216$213$201$195Dollar Tree$187$190$182$174$167Family Dollar$183$175$170$163$157Over the past 5 years, Dollar General has done really well for itself. With sales of $17.5 billion, Dollar General is almost as large as what Family Dollar and Dollar Tree would be combined (sales of $18.3 billion). One way to measure how well the company stands against its peers is to analyze their sales per square foot (below).Using 2013's metrics, Dollar General generated revenue per?square foot?of $220, up 13% from the $195 per square foot seen five years earlier. While both of its peers have also done a nice job of increasing this sales metric, neither one has been able to catch up with Dollar General. It should be noted, however, that the 20% growth rate boasted by Family Dollar over this time frame suggests that it could, eventually, successfully catch up to and maybe even surpass its larger rival.This growth is one key to explaining why Dollar General wants to acquire the business. With a fast growth in revenue per square foot, the store chain has demonstrated the ability to outpace both of its peers by a decent margin. Another likely reason, however, is that if Dollar General can succeed in growing Family Dollar's revenue per square foot up to its own, then it would have generated extra sales of $2.1 billion in 2013.Value of Family Dollar Under Different SuitorsDollar GeneralDollar TreeRevenue Inc.$2.10 billion$227.2 millionEst. Synergies$550-$600 million$300 millionWho Can Afford Family Dollar More Easily?Dollar GeneralDollar TreeCash$166.3 million$387.1 millionLong-Term Debt$3.01 billion$757 millionDebt/Equity0.620.57Utilizing Dollar General's operating margin of 9.92% for the year, this transaction would unlock an extra $208.5 million in operating income, plus as much as $342.8 million from cost reductions if Dollar General can create the same kind of operating efficiencies under the combined company than it has itself. This is roughly in line with the $550 million to $600 million management cited in synergies over the next three years, and is around twice as large as the $300 million in synergies estimated in a Dollar Tree purchase of the business.But Dollar Tree might be better positioned for a buyoutNo matter who buys Family Dollar, some debt with have to be taken on by the acquirer. However, because a deal involving Dollar Tree will likely consist of a smaller cash component, the transaction will be less burdensome for it than rival Dollar General. Add to this the fact that Dollar Tree currently holds $387.1 million in cash (compared to Dollar General's $166.3 million) and has long-term debt (inclusive of capital lease commitments) of just $757 (compared to Dollar General's $3.01 billion) and it seems like it has the ability to offer more than Dollar General can.Another way to look at this is through each company's debt/equity ratio. Right now, Dollar General's hefty debt load gives it a debt/equity ratio of 0.62. This is far from high and it's possible that the business could increase this significantly without solvency fears, but?it's lower?still than rival Dollar Tree, whose long-term debt/equity ratio stands at 0.57.TakeawayBy acquiring Family Dollar, Dollar General and Dollar Tree can not only grow their revenue but also increase their profitability (assuming that their synergy estimates are right). Based on the data provided, it seems as though Dollar General has the greatest incentive to get its way because of how much more valuable the Family Dollar brand is under its roof, but because of debt and cash on hand, Dollar Tree could likely afford a buyout more so than its big brother can.Dollar General Lobbying Family Dollar Shareholders Advises Family Dollar Shareholders to Vote Against Dollar Tree OfferBy LIZ HOFFMAN and PAUL ZIOBRO CONNECT, WSJ, Sept. 19, 2014 5:04 p.m. ETDollar General Corp. began actively soliciting votes against a deal that would unite its two main rivals, ratcheting up its effort to acquire Family Dollar Stores Inc. The move, disclosed in a securities filing Friday, is Dollar General's latest attempt to take its $9.1 billion bid directly to Family Dollar's shareholders and circumvent the company's board, which has repeatedly spurned the offer in favor of an $8.5 billion cash and stock sale to Dollar Tree struck in late July.Dollar General filed proxy materials with the Securities and Exchange Commission that it will distribute to Family Dollar's shareholders advising them to vote against the deal. "We believe that a vote against the Dollar Tree merger agreement proposal will send a clear message to the board of directors of Family Dollar…that you want our offer to succeed," Dollar General said in the proxy materials.Last week, Dollar General launched an $80 a share cash tender offer for Family Dollar. Family Dollar called the bid "illusory and a distraction," noting various technicalities that would allow Dollar General to walk away, and suggested that Dollar General was more interested in sabotaging the sale to Dollar Tree than actually doing a deal itself. In a statement last week, Dollar General CEO Rick Dreiling said Family Dollar's accusations "are not worthy of debate" and said his company is serious about buying Family Dollar.Family Dollar continues to recommend the deal with Dollar Tree, despite the lower price of $74.50 a share in cash and stock, arguing that the Dollar General deal carries too much antitrust risk. Family Dollar and Dollar General operate virtually identical business models, stocking household goods and grocery items at discount prices, while Dollar Tree has less of an overlap, selling most of its products for $1.Dollar General has offered to divest up to 1,500 stores to secure antitrust approval and to pay Family Dollar $500 million if regulators block the deal, but has stopped short of committing to do whatever is required to gain approval--a so-called "hell or high water" commitment to close the transaction.Family Dollar shares closed up 11 cents at $78.76. They've traded above the Dollar Tree offer price since the day the deal was announced on July 28, but drifted below $80 after Family Dollar agreed to a modified offer from Dollar Tree, which committed to sell as many stores as necessary—or sensible—to get the deal done.Elliott Nominates Board Slate at Family DollarActivist Presses Discount Retail Chain to Entertain Bid From Dollar General By PAUL ZIOBRO and DAVID BENOIT, WSJ, Updated Oct. 17, 2014 5:51 p.m. ETA fight among hedge funds has broken out in the aisles of Family Dollar Stores Inc. Activist investor Elliott Management Corp. thrust itself into bidding war over the discount chain Friday, launching an effort to take over the company's board and pressing it to accommodate a bid from rival Dollar General Corp.Family Dollar has stuck with its agreement to be bought by another discounter, Dollar Tree Corp., for $8.5 billion and has refused to negotiate with Dollar General, which is proposing to pay $9.1 billion. Elliott criticized Family Dollar's handling of the sale process in an open letter late Friday, saying the company missed its chance to "facilitate a bidding war between two large, well-capitalized strategic acquirers."Trian Fund Management LP, meanwhile, backs the Dollar Tree deal, and a fund executive sits on Family Dollar's board. The multiparty battle involving three companies with similar names and two driven hedge funds highlights the risks companies face when considering strategic moves in an environment of empowered-and well-funded-activist investors. At stake is the Family Dollar brand, which would retain its separate identity and CEO under the Dollar Tree deal Family Dollar is headed by Chief Executive Howard Levine, whose father, Leon, founded the company. Elliott said it owns 4.9% of Family Dollar's stock, enough to make it a top-10 shareholder, according to FactSet. The fund nominated a slate of seven candidates to the company's ll-person board. The deadline for such nominations is Saturday.Family Dollar said it would review the Elliott letter. Dollar General and Dollar Tree declined to comment.Elliott began building its Family Dollar position in late August, according to people familiar with the matter, after Family Dollar had already rejected one offer from Dollar General. Elliott often buys stakes in companies that have agreed to be bought and then pushes for a better price, sometimes through activist campaigns. Many of those have been aimed at companies in Europe, where shareholders ofthe selling companies have different rights to block deals. Earlier this year, Elliott pushed drug retailer McKesson Corp. to bump up its price for Germany's Celesio AG after holding out support as a major shareholder of Celesio.Its complaints echo those made less publicly by other hedge funds that are concerned Family Dollar hasn't used Dollar General's approach to get a better price. Elliott also questioned the qualifications of Family Dollar's board, saying that many members have served for long periods and some lack independence to properly consider the offer.Family Dollar has said a Dollar General deal, as currently proposed, carries more risk of being rejected by antitrust regulators and has sought to get Dollar General to assume that risk.Note that this packet will be updated online as news develops! ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download