Analysts Disagree On Merger Details Between Family Dollar, Dollar General

Rumors surrounding a merger between Family Dollar Stores FDO and Dollar General DG continue to circulate following the announcement that Dollar General's CEO is stepping down.

Richard Dreiling Announces Retirement

In an 8-K filing on Friday, Dollar General announced that Chairman and CEO Richard Dreiling informed the company of his intention to retire.

"Mr. Dreiling has agreed to serve, at the discretion of the Board of Directors, as Chairman during a transition period following the appointment of a new Chief Executive Officer. Mr. Dreiling's retirement date and any agreement regarding continued service on the Board of Directors are expected to be finalized as part of a retirement agreement between Mr. Dreiling and the Company."

Possible Merger in Sight?

Shares of Dollar General fell as much as eight percent following the filing, as investors and analysts question the company's next move.

Following Carl Icahn's announcement to explore "strategic alternatives" with Family Dollar in June, analysts have been speculating on a potential merger.

Bank of America noted that Dreiling's step down is not unexpected, with the CEO selling most of his holdings earlier this year. In addition, a merger between the two companies would likely not complicate matters. The analyst emphasized that the biggest obstacle of a merger has been the existing management teams.

Scot Ciccarelli from RBC Capital commented that the potential will not likely be formalized until Dreiling exits on May 30, 2015, or upon naming the successor.

Wells Fargo remarked that it has been skeptical of a merger between Dollar General and Family Dollar from the beginning. The firm reported that a deal is even more unlikely following the retirement of Dreiling. Wells Fargo remarked that the retirement could reaffirm that the company will not change its strategic course.

Stock Action

Shares of Dollar General have regained some losses in Friday's trading session. The stock is currently trading at $57.01, down 7.59 percent.

Family Dollar plummeted to $65.33 Friday morning, down 3.9 percent. Shares of Family Dollar are currently trading at $66.55, down 2.13 percent.