Dollar General Shares Tumble Following CEO Resignation; Analysts Disagree
Shares of Dollar General (NYSE: DG) are selling off sharply following the announcement that CEO Rick Dreiling will step down from the company.
Investors may be parting ways with their holdings because the transition may complicate a deal with Family Dollar (NYSE: FDO).
Earlier in June, Carl Icahn announced an activist stake in Family Dollar and said that he would explore “strategic alternatives” with the company. The idea investors most speculated on is a merger between Family Dollar and Dollar General, allowing the companies to take advantage of combined cost savings.
Despite many claiming that the deal will complicate matters, Bank of America analysts do not believe this is the case. According to Bank of America, the biggest obstacle of a merger has been the existing management teams. In addition, it is not a surprise that Dreiling has decided to step down; the executive sold most of his Dollar General holdings earlier this year.
Dollar General shares are trading lower by 7.17 percent at $57.26 in Friday's session. Family Dollar shares are down more than three percent.
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