Dollar store merger activity: Not so fast…

Since my recent post about the proposed takeover of Family Dollar by Dollar Tree, now Dollar General has entered the competition. (And they have just announced upping the ante on their offer price.) This merger makes more sense to me, as I expressed it on a recent RetailWire post:

The combination of FD and DG is potentially a lot more compatible than the Dollar Tree deal. As many have pointed out, Dollar Tree pursues a completely different strategy (everything at $1 or below) so the growing pains involved in an acquisition of Family Dollar could be painful.

But Dollar General’s move is complicated, too. First, it is more likely to be scrutinized for antitrust issues. Second, there is some likely real estate overlap that needs to be addressed. Finally, cultural differences are never easy to work out when one rival buys another.

The best recent parallel, on the last point, was the Macy’s acquisition of May Department Stores several years ago. It worked out well over time, but it took years to achieve the kinds of efficiency and synergy that Macy’s had in mind.

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