Dollar General isn’t about to be left out in the cold. The discounter is starting a bidding war for Family Dollar with a $9.7 billion offer as it attempts to trump a $8.5 billion bid by Dollar Tree.
For Dollar General, the decision to enter the fray was clear because Family Dollar had been on its radar for a while. Dollar General Chairman and chief executive Rick Dreiling said during a conference call Monday that the company had expressed interest in combining with Family Dollar multiple times during the past few years.
He said Dollar General was surprised when Family Dollar announced its deal with Dollar Tree. “It’s all water under the bridge. We’re ready to move forward,” Dreiling said.
A Dollar General and Family Dollar combination would create a chain with almost 20,000 stores in 46 states and sales of more than $28 billion. The two businesses also have similar pricing strategies, offering shoppers most products at $10 or less. At Dollar Tree, everything in its stores costs just a buck.
Family Dollar has come into play because of its business struggles. The Charlotte-based company has been shuttering stores and cutting prices in hopes of boosting its financial performance. In June, investor Carl Icahn urged the company to put itself up for sale.
Dollar General, based in Goodlettsville, Tenn., said it would pay $78.50 per share in cash. That’s 3 percent higher than Family Dollar Stores’ Friday closing price of $76.06. Dollar General put the deal’s value at $9.7 billion.
Last month Dollar Tree, , based in Chesapeake, Va., made an $8.5 billion bid for Family Dollar. It offered to pay $59.60 in cash and the equivalent of $14.90 in shares of Dollar Tree for each share held. The companies valued the transaction at $74.50 per share at the time. Including debt and other costs, the companies estimated the transaction to be worth about $9.2 billion.
— Associated Press
Home builders feel better about their prospects these days.
The National Association of Home Builders reported Monday that its home builder confidence index is up for the third straight month, to its highest level since January.
A steadily improving job market, low interest rates and prices that in much of the country remain below past highs are helping to drive greater demand for new homes, the association said.
“Builder confidence appears to be firming following an uneven spring,” NAHB chief economist David Crowe said.
The trade group surveys its members monthly to generate a score of 1 to 100 measuring confidence. Conditions above 50 are generally considered positive. In August, the index measured 55. Builders are most confident about prospects for sales in the next six months — which measured 65 — and current sales — 58. The measure of current buyer traffic lags, at 42, but climbed three points this month.
Builders still face a number of challenges, said NAHB chairman Kevin Kelly, a builder and developer from Wilmington, Del., including tight credit conditions for borrowers and a shortage of finished lots and labor.
Builders were most confident in the West and least confident in the Northeast.
— Los Angeles Times
● Ketchup maker H.J. Heinz has recalled some infant food in eastern China after it was found to contain lead in excess of the allowable limit, the company said. The move by Heinz comes after food safety regulators in eastern Zhejiang province said they had found “excessive amounts of lead” in the company’s AD Calcium Hi-Protein Cereal. Heinz said it is recalling four batches of the product as a precautionary measure.
● China’s government said Mercedes-Benz violated anti-
monopoly law and charged excessive prices for spare parts in “vertical price-fixing,” according to the official Xinhua News Agency. It said investigators from the price bureau of the eastern province of Jiangsu found prices were so high that purchasing the parts used to make one Mercedes C-class car would cost the equivalent of buying 12 vehicles. An official said earlier that Audi and Chrysler would face unspecified punishment.
● A former senior trader at Rabobank pleaded guilty to participating in a scheme to manipulate the yen Libor rate, becoming the second employee of the Dutch-based lender to admit guilt in a U.S. probe into alleged manipulation of interest rate benchmarks worldwide. Paul Robson, a British citizen who submitted Rabobank’s rates used to calculate the Japanese Yen London InterBank Offered Rate, conspired to manipulate the submissions to benefit trading positions between 2006 and 2011, the Justice Department said. Takayuki Yagami, another former senior trader at Rabobank, in June became the first to plead guilty.●
— From news services
● 8:30 a.m.: Consumer price index and housing starts for July.
● Earnings: Home Depot.