Market Overview

Susquehanna Says Dollar General's Bid 'Appears Desperate'

Share:
Related DG
Stephen Mandel's Lone Pine Capital Loves Tech, Consumer Stocks
Paulson & Company's Q4 Moves: Healthcare And Beyond
New Buy Ins And Profit Taking: The Well-Valued Growth Portfolio This Month (Seeking Alpha)

Dollar General's (NYSE: DG) shareholders are facing significantly heightened risk from the company's latest bid to dominate the dollar-store retail space, an analyst said Tuesday.

Susquehanna's Robert Summers said the company's move Tuesday to boost its offer to $9.1 billion for Family Dollar Stores (NASDAQ: FDO) "appears desperate" in light of its plan to include a $500 million break-up fee and plan to sell up to 1,500 stores to satisfy anti-trust concerns.

Summers said he's less optimistic than the Street consensus that the deal will get done. Summers is also concerned that Federal Trade Commission regulators would seek divestitures at the "high end" of the 1,500 stores offered by Dollar General.

Dollar General's earlier $8.95 billion offer included selling up to 700 stores and a break-up fee of $305 million if the deal went sour.

Family Dollar said Tuesday it's reviewing the latest Dollar General offer. Previously, citing anti-trust concerns, Family Dollar said it preferred an $8.1 billion offer from Dollar Tree (NASDAQ: DLTR).

Although Summers said the deal looks "increasingly defensive," he continues to maintain a Positive rating and $72 target.

Dollar Tree gained 1.5 percent Tuesday morning to $54.45. Dollar General and Family Dollar were each up around 0.5 percent.

Latest Ratings for DG

DateFirmActionFromTo
Feb 2015JP MorganReinstatesOverweight
Dec 2014CitigroupInitiates Coverage onBuy
Dec 2014BarclaysMaintainsEqual-weight

View More Analyst Ratings for DG
View the Latest Analyst Ratings

Posted-In: Robert Summers SusquehannaAnalyst Color News Price Target Reiteration M&A Analyst Ratings

 

Related Articles (DLTR + DG)

Around the Web, We're Loving...

Get Benzinga's Newsletters

Our Experts vs. S&P 500Powered by Benzinga
Marketfy Products Return S&P 500
Morning Profit Maker 42.72% 6.69%
The Option Prophet 91.14% 6.69%
SecretCaps 26.55% 6.69%
Short-Term Trend Trading 11.89% 6.69%
View the highest rated products→