Should Dollar General’s bid prove successful, the combined brands would generate sales topping $28bn and will operate almost 20,000 stores in 46 states.
Dollar General, which is based in Goodlettsville, Tennessee, is the largest discount retailer in the US operating 11,000+ stores in 40 states; Family Dollar, which is based in Matthews, North Carolina, operates more than 8,000 stores.
Dollar General CEO Rick Dreiling said that the “business models and product mixes of Dollar General and Family Dollar are highly complementary”.
The deal would generate synergies of $550m to $600m on an annual run-rate three years post-closing, added Dreiling, who said Dollar General would be willing to divest up to 700 stores to appease regulators: “There is opportunity to more efficiently and effectively manage the Family Dollar portfolio of stores given Dollar General's strong track record of success in improving its own profitability since 2008."
In a letter to Family Dollar CEO Howard Levine, Dreiling said: “We were surprised and disappointed to find out you had entered into a merger agreement with Dollar Tree. Not only is our offer superior in price, it is 100% cash, as compared to the mix of cash and stock being offered by Dollar Tree.”
Click HERE to read the text of the letter in full.