Claudia Higgins Discusses Concerns Over Divested Assets in Proposed Dollar Store Merger in Reuters

As seen in Reuters’ “Dollar General To Go Hostile With $9.1 Bln Family Dollar Bid”

September 10, 2014

Reuters reports that Dollar General Corp. is planning to bring its $9.1 billion dollar offer to buy rival discount retail chain Family Dollar Stores directly to shareholders after Family Dollar turned down two previous, unsolicited approaches. According to sources, Dollar General has included plans to divest up to 1,500 stores, as well as a $500 million break-up fee, in its latest offer after Family Dollar claimed that the antitrust risks were too high for any merger between the two companies to be considered.

According to Kaye Scholer Antitrust Partner Claudia Higgins, a former Assistant Director of Regional Litigation at the Federal Trade Commission, the FTC would want to ensure that whoever buys those divested stores would be able to keep them open and profitable in order to keep competition healthy.

Higgins noted that there have been situations in which an inability to find an appropriate buyer for divested assets resulted in the collapse of a transaction, but this is uncommon. When such a failure does occur, it is usually in more specialized industries than the retail sector. "Seems to me that somebody who runs drug stores would know how to run a store that sells sundries. Or the owner of a small grocery store. Or a private equity company that owns retailers," she concluded.

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