A Dollar General store located in Michigan. (Photo Credits: Wikipedia)
The recent offer made by Dollar General to purchase the Family Dollar company has been turned down, leading to Dollar General’s attempt at a hostile takeover. In the billion dollar war of the dollar stores, Dollar General is now offering $80/share (a $9.1 billion offer), higher than their previous offer of $78.50/share.
The board of directors rejected the most recent offer because of antitrust concerns. These were addressed by Dollar General, offering to sell up to 1500 stores to appease the FTC, and pay $500 million to Family Dollar if the deal goes sour for antitrust reasons.
Are the “antitrust concerns” really as they say they are, or is there an ulterior motive? After all, board of directors often become replaced after hostile takeovers, so they may simply be protecting their jobs by hiding behind the convenient excuse of “antitrust” issues.
Or, are things transparent as they claim? Perhaps they are genuinely concerned for the fate of their shareholders. While this may be the case, the management executives are nonetheless acting as agents of the company, and ultimately, its shareholders (as discussed in Friedman’s article). With shareholders being fairly informed of the risks (unless they have been hiding under a rock), they should be able to determine what to do with their own shares.
So, is a hostile takeover really “hostile”? Perhaps to the board of directors, but not to the shareholders. Business ethics can be confusing, as illustrated in the film, Billy Madison.
For the original article, see this link.