Family Dollar accepts Dollar Tree takeover

Shareholders of Family Dollar Stores have approved its merger with smaller rival Dollar Tree, the company said Thursday, ending the three-way battle over consolidation in the discount "dollar store" industry.

The vote gave the go-ahead for Dollar Tree's nearly $8.5 billion, $74.50-a-share bid for Family Dollar, which will combine the two into a powerful 13,000 store group across the United States and parts of Canada, with $18 billion in annual turnover.

It also put an end to efforts by the third main company in the same market, Dollar General, to buy Family Dollar.

Dollar General had offered $80 a share in cash for Family Dollar, but the latter's board argued against it, saying the combination, though it would potentially create a 20,000 store, $28 billion powerhouse, it could run afoul of anti-trust regulators.

"The Family Dollar Board of Directors and management team have worked diligently to advance the best interests of all of the Company's stockholders, and we are grateful for the support we received for the merger proposal," Family Dollar chairman and chief executive Howard Levine said in a statement.

Levine noted that the Dollar Tree-Family Dollar tie-up itself still needs anti-trust approval from the Federal trade Commission.

Dollar Tree said it expects to reach preliminary agreement with the FTC by the end of January on divesting an unstated number of stores.

The deal brings together two chains serving the same low- and middle-income suburban and rural markets, with different sales angles: Dollar Tree sticks to an "everything costs one dollar" approach, while Family Dollar has a full range of prices.

"This merger enhances our geographic footprint and diversifies our business model," said Bob Sasser, Dollar Tree chief executive.

"We intend to operate and grow both banners. At Dollar Tree stores, everything is $1 while Family Dollar stores will continue to serve low to middle income customers with name brand consumables, home basics, variety and seasonal products at discount store prices."

Dollar General's chief executive Rick Dreiling called the shareholder vote "a loss not only for Family Dollar shareholders, but also for consumers across the country who will not have the opportunity to benefit from the cost savings and efficiencies that we believe would have been created by a merger between Dollar General and Family Dollar."