Family Dollar Stores, Inc.
Acquisition of Family Dollar Stores, Inc. by Dollar Tree, Inc. May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Family Dollar Stores, Inc. (NYSE: FDO) by Dollar Tree, Inc. (NASDAQ: DLTR). On July 28, 2014, the two companies announced the signing of a definitive merger agreement pursuant to which Dollar Tree will acquire Family Dollar. Under the terms of the agreement, Family Dollar shareholders will receive $59.60 in cash and the equivalent of $14.90 in Dollar Tree shares, for a total consideration of $74.50 per share. Following the closing of the transaction, Family Dollar shareholders will own no less than 12.7% and no more than 15.1% of the outstanding common stock of Dollar Tree.
Is the Proposed Acquisition Best for Family Dollar and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Family Dollar is undertaking a fair process to obtain maximum value and adequately compensate Family Dollar shareholders.
As an initial matter, the $74.50 merger consideration is significantly below the target price of $79.00 set by an analyst at Jefferies on June 9, 2014. Further, Family Dollar shares have traded above the merger consideration as recently as September 19, 2013, when it reached a high of $75.29 and closed at $74.70 per share on that same day. In addition, on July 10, 2014, Family Dollar released its results for the company’s third quarter 2014. For the quarter, Family Dollar reported a gross profit of $910 million, or 34.3%, of net sales of $2.66 billion. Moreover, the company beat analyst estimates for sales in the third quarter.
In announcing these results, Family Dollar Chairman and CEO, Howard Levine, remarked, “We are executing our previously announced restructuring initiatives to improve our performance .… Our recent investment to permanently lower prices is resonating with customers; we are seeing savings from our workforce optimization efforts; and we are on track to close approximately 370 underperforming stores by the end of the fiscal year. We remain confident that these steps will position the Company to improve our financial performance and deliver higher long-term shareholder returns.”
In light of these facts, Robbins Arroyo LLP is examining Family Dollar’s board of directors’ decision to merge the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Family Dollar shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Family Dollar shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.