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By Matt Townsend
Dec. 23 — Family Dollar Stores Inc. shareholders, who met Dec. 23 to weigh a takeover by Dollar Tree Inc., delayed the decision until next month, giving them more time to consider a competing bid.
Investors voted to adjourn the meeting until Jan. 22 by almost a 5-to-1 ratio, the Matthews, N.C.-based company said in a statement.
Institutional Shareholder Services Inc., a proxy adviser, urged investors earlier this month to delay the vote, saying it wouldn't jeopardize an eventual deal and could result in a higher price. Another dollar-store chain, Dollar General Corp., has made a higher bid, though Family Dollar management says a merger with that retailer would face regulatory hurdles. Dollar General is already the largest dollar-store chain, which would put it under more antitrust scrutiny.
Today marks the second time a decision on the Dollar Tree deal has been delayed. In November, Family Dollar pushed back the shareholder meeting 12 days to Dec. 23.
After having two bids rejected by Family Dollar's board, Dollar General took its offer of $80 a share directly to investors in September. That move sent the proposal to the U.S. Federal Trade Commission for review. Family Dollar has said that a combination with Dollar General is more at risk of being derailed because the chains have such similar business models and customer bases, potentially raising concerns that the combined entity would raise prices. That's why it's sticking with the lower offer of $74.50 a share from Dollar Tree.
The Delaware Chancery Court earlier in December rejected a bid to block the proposed vote.
Divestitures are the main area of disagreement in the monthslong saga. Dollar General has said it's willing to sell as many as 1,500 of its 11,500 locations to win FTC approval. Family Dollar contends that regulators will ask for many more than that. Dollar Tree, meanwhile, has said it can win FTC approval by getting rid of no more than 500 locations—a threshold it already agreed to.
Dollar General updated investors on its dealings with the FTC last week, saying that it was “actively engaged” with the agency. It didn't provide more details on how many locations it may have to divest to get its deal approved.
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