Dollar General Corporation (NYSE: DG) today announced it has sent the
following letter to the Board of Directors of Family Dollar Stores, Inc.
August 20, 2014
Board of Directors
Family Dollar Stores, Inc.
10401 Monroe Road
North Carolina 28201
To the Board of Directors of Family Dollar Stores, Inc.:
We have reviewed the Form S-4 on the background of your current merger
agreement with Dollar Tree. As the Family Dollar Board of Directors
considers our superior proposal, we believe it is important for you to
take into account certain important facts that are not included in the
Form S-4 relating to our interaction with your company.
While the Form S-4 references various meetings between our companies’
representatives over the years, it fails to mention that Dollar General
representatives have consistently expressed a keen interest in putting
our two companies together. The Form S-4 also fails to mention that on
more than one occasion at such meetings, Howard Levine expressed his own
interest in the social issues of a combination, including, among other
things, his desire to be chief executive officer of the combined
companies. We cannot help but question whether Dollar General’s failure
to embrace such requests by Mr. Levine weighed into Family Dollar’s
decision to pursue an agreement with Dollar Tree.
As you are aware, we continued to express our interest in exploring a
combination into June of this year. During the June 7, 2014, phone call
referenced in the background section of the Form S-4, our representative
reiterated Dollar General’s interest in potentially acquiring Family
Dollar and stated our preference to negotiate directly with the Board of
Directors and not in the public media, as might be the case with an
activist investor involved, and suggested a meeting with the Dollar
General CEO as soon as possible.
That meeting was held on June 19, 2014, just days before the Family
Dollar Board decided to enter into exclusive negotiations with Dollar
Tree. During the June 19 meeting, although noting that the timing was
not optimal for Dollar General, our representatives expressed more than
once our interest in exploring a combination with Family Dollar. At no
time during this meeting did Mr. Levine indicate that there was a
process, that there was any urgency to act or that there were
discussions with another potential buyer. In fact, Mr. Levine’s response
to specific questions posed by our representatives gave us quite the
opposite impression. Had we left the meeting with the belief that a sale
of Family Dollar was imminent, we assure you that our course of action
would have been different.
At that meeting, the Dollar General representatives communicated to Mr.
Levine that Dollar General’s interest likely would be at a modest
premium to the current stock price ($68.14 at such time). It is
surprising, then, that, according to the Form S-4, your board was
considering at that time a proposal in that range from Dollar Tree, and
yet no representative of Family Dollar followed up with any
representative of Dollar General after that meeting and before entering
into the merger agreement with Dollar Tree.
This lack of engagement is puzzling. Regrettably, as a result, we are
now forced to factor a $305 million break-up fee into our offer –
consideration that could have been better used to maximize value for the
Family Dollar shareholders.
Nonetheless, we have presented you with a superior proposal for your
shareholders (although perhaps not for Mr. Levine personally), and we
urge you to evaluate our proposal on its merits considering this full
set of facts and in keeping with your obligation to consider first and
foremost the best interests of your shareholders.
Finally, we have heard the media reports in which unnamed sources close
to Family Dollar are claimed to have expressed concern about antitrust
matters relating to a potential acquisition by Dollar General. As we
stated in our offer letter, we have engaged experienced counsel and an
economist and have conducted extensive review and analysis of these
matters, and we are confident that we will be able to quickly and
efficiently resolve any potential antitrust issues. In fact, we believe
that the number of store divestitures contained in our offer letter is
more than sufficient to take this issue completely off the table. We
remain ready to share with your counsel the conclusions of our extensive
antitrust work once you have taken the appropriate steps under your
existing merger agreement with Dollar Tree to enable us to begin
We urge the Family Dollar Board of Directors to act in the best
interests of the Family Dollar shareholders and take the necessary steps
to enter into discussions with us.
Dollar General Corporation
Chairman and Chief
Dollar General includes “forward-looking statements” within the meaning
of the federal securities laws throughout this release, including by way
of example and without limitation plans, intentions and expectations
regarding Dollar General’s proposal to acquire Family Dollar. A reader
can identify forward-looking statements because they are not limited to
historical fact or they use words such as “may,” “will,” “could,”
“should,” “would,” “expect,” “believe,” “anticipate,” “project,” “plan,”
“estimate,” “forecast,” “goal,” “objective,” “committed,” “intend,”
“continue,” or “will likely result” and similar expressions that concern
Dollar General’s strategy, plans, intentions or beliefs about future
occurrences or results.
Forward-looking statements are subject to risks, uncertainties and other
factors that may change at any time and may cause actual results to
differ materially from those that Dollar General expected. Many of these
statements are derived from Dollar General’s operating budgets and
forecasts, which are based on many detailed assumptions that Dollar
General believes are reasonable, or are based on various assumptions
about certain plans, activities or events which we expect will or may
occur in the future. However, it is very difficult to predict the effect
of known factors, and Dollar General cannot anticipate all factors that
could affect actual results that may be important to an investor. All
forward-looking information should be evaluated in the context of these
risks, uncertainties and other factors, including those factors
disclosed under “Risk Factors” in Dollar General’s most recent Annual
Report on Form 10-K and any subsequent quarterly filings on Form 10-Q
filed with the Securities and Exchange Commission.
All forward-looking statements are qualified in their entirety by the
cautionary statements that Dollar General makes from time to time in its
SEC filings and public communications. Dollar General cannot assure the
reader that it will realize the results or developments Dollar General
anticipates or, even if substantially realized, that they will result in
the consequences or affect Dollar General or its operations in the way
Dollar General expects. Forward-looking statements speak only as of the
date made. Dollar General undertakes no obligation to update or revise
any forward-looking statements to reflect events or circumstances
arising after the date on which they were made, except as otherwise
required by law. As a result of these risks and uncertainties, readers
are cautioned not to place undue reliance on any forward-looking
statements included herein or that may be made elsewhere from time to
time by, or on behalf of, Dollar General.
About Dollar General Corporation
Dollar General Corporation has been delivering value to shoppers for 75
years. Dollar General helps shoppers Save time. Save money. Every day!®
by offering products that are frequently used and replenished, such as
food, snacks, health and beauty aids, cleaning supplies, basic apparel,
house wares and seasonal items at low everyday prices in convenient
neighborhood locations. With more than 11,500 stores in 40 states,
Dollar General has more retail locations than any retailer in America.
In addition to high quality private brands, Dollar General sells
products from America's most-trusted manufacturers such as Clorox,
Energizer, Procter & Gamble, Hanes, Coca-Cola, Mars, Unilever, Nestle,
Kimberly-Clark, Kellogg's, General Mills, and PepsiCo. For more
information on Dollar General, please visit www.dollargeneral.com.
Copyright Business Wire 2014