Dollar General Bids $9.7 Billion for Family Dollar Takeover

Dollar General Corp., the discount variety chain store, announced Monday its bid to take over rival firm Family Dollar for $9.7 billion.

Dollar General proposes to pay $78.50 for each share of Family Tree to their shareholders and claims its offer is better than Dollar Tree's bid.

Earlier this month, Dollar Tree had offered to buy all shares of Family Dollar for $59.60 in cash and shares worth $14.90 for each unit of Family Tree.

"For Family Dollar shareholders, our proposal is financially superior to the current transaction agreement with Dollar Tree and would provide Family Dollar shareholders with a substantial premium and immediate liquidity for their shares," Rick Dreiling, chairman and chief executive of Dollar General said in a statement.

"For Dollar General shareholders, the proposed combination of Dollar General and Family Dollar would be a significant strategic opportunity to create immediate and lasting shareholder value. For both Dollar General and Family Dollar customers, we would be able to provide better value and greater selection," he added.

Dollar General claims its offer would "solidify" its position as a leading discount retail chain. The company's business model was more of a strategic and synergic fit and would complement Family Dollar's business

Dollar General said that it was ready to shed 700 stores in order to avoid mistrust with Family Tree. Citigroup and Goldman Sachs have chipped in to finance Dollar General in the deal, which includes a $305 million termination fee that will be paid to Dollar Tree if Family Dollar declines the offer.

This latest offer by Dollar General is heating up the bidding war for Family Dollar. Will Dollar Tree raise its bid for the firm? Or will it take the backseat?