Dollar General increases Family Dollar offer in takeover tussle

Dollar General Corp. raised its offer for smaller rival Family Dollar Stores Inc. after an initial proposal was rejected in favor of a lower bid on antitrust concerns.

Dollar General offered to pay $80 a share in cash, it said today in a statement, compared with an initial $78.50 bid. The retailer also said it's prepared to sell as many as 1,500 stores if ordered to do so by the Federal Trade Commission and has agreed to pay a $500 million reverse break-up fee to Family Dollar if the bid is not completed due to antitrust matters.

Dollar General is trying to keep its perch atop the dollar- store industry after Family Dollar's board spurned its offer last week and reaffirmed its support of a deal with Dollar Tree Inc. A merger between Dollar General's two peers would create a new market leader, intensifying competition while Wal-Mart Stores Inc. is pushing smaller-format stores.

Family Dollar shares closed at $79.83 on Aug. 29, the last day that markets were open for business.

To contact the reporter on this story: Paul Jarvis in London at pjarvisbloomberg.net To contact the editors responsible for this story: Celeste Perri at cperribloomberg.net Robert Valpuesta