Money apparently isn’t everything at Family Dollar (FDO).
The retail chain rejected a $8.9 billion takeover bid by Dollar General (DG) this morning, opting to stick with an earlier $8.5 billion offer from Dollar Tree (DLTR). It said the higher bid came with “significant antitrust issues,” potential hurdles that the company apparently was willing to sacrifice $400 million to avoid.
Dollar General, the spurned suitor, has suggested that Howard Levine, chief executive of its takeover target, is simply keen to keep his job, which would be more likely under Dollar Tree ownership.
Levine, however, said the decision to go with the lower bid was unanimous. “Our board reviewed, with our advisers, all aspects of Dollar General’s proposal and unanimously concluded that it is not reasonably likely to be completed on the terms proposed,” Levine said in a statement.
To review, there are important differences in the three companies. Dollar Tree is a true “dollar store,” in that it doesn’t sell anything for more than a buck. Dollar General and Family Dollar flirt with the $10 threshold. Dollar Tree is still the smallest, but all have been growing rapidly:
Dollar Tree is also the most profitable. Perhaps because it has been the most cautious about expansion, the company managed a 6.8 percent net margin in the past three months. Dollar General squeaked out a 5.8 percent profit margin, while Family Dollar, the chain everyone is keen to buy, managed to keep only $3 of every $100 in sales.
Meanwhile, Dollar Tree is getting ready for its big splurge. This morning, the company cut its full-year earnings forecast in preparation for the Family Dollar acquisition. If the bidding war continues—and there’s plenty of evidence that it will—that forecast could require yet another update.