Dollar General Ups Bid for Family Dollar; Warns Will Go Hostile

Dollar General, the famous discount departmental chain, upped its bid Tuesday to acquire rival firm Family Dollar and warned that it would go hostile and appeal directly to the shareholders if this bid was rejected.

Dollar General announced that it had sent an enhanced acquisition proposal to Family Dollar upping its bid by 2 percent to $80 per share. It also said that it would pay $500 million if the deal ran foul, the reason Family Dollar refused the offer.

With this announcement, Dollar General hopes to cement this deal especially as other rival firms like Dollar Tree have been vying for Family Dollar.

"We are confident that our enhanced proposal sufficiently addresses any concerns that led Family Dollar's Board of Directors to reject our prior proposal without any discussions between our companies," Rick Dreiling, Dollar General's Chairman and Chief Executive Officer said in the statement.

"Even as a secondary antitrust review supported our previous proposal, we revised our offer to demonstrate the seriousness of our commitment. Our revised proposal provides Family Dollar shareholders with significantly increased value over the existing agreement with Dollar Tree, as well as immediate and certain liquidity for their shares. If the Family Dollar Board fails to seize this opportunity to maximize value for its shareholders, we will consider taking our superior proposal directly to the Family Dollar shareholders," he added.

Dollar General also told Family Dollar that it would take the proposal directly to the shareholders if the board refuses the bid.

Dollar General previously proposed to pay $78.50 for each share of Family Tree to their shareholders claiming that its offer was better than Dollar Tree's bid.

 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 in early August.