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Susquehanna Says Dollar General's Bid 'Appears Desperate'

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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
Dec 2014CitigroupInitiates Coverage onBuy
Dec 2014BarclaysMaintainsEqual-weight
Dec 2014Credit SuisseMaintainsOutperform

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

 

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