“It's hard to know...what Family Dollar's board is thinking, but it's not unreasonable for them to say the risk is too high to Family Dollar, that they're going to lose the opportunity to do the deal with Dollar Tree,” said Davis. “They have to predict what the FTC would do...based in part on a lot of data that's in possession of Dollar General, not Family Dollar.”
Dollar General’s move does give them more of a say in the antitrust review process. “What changed overnight was that Dollar General got the deal in front of the agency instead of having to deal with Family Dollar's predictions about how the antitrust analysis would go,” said Davis.
In the end, Family Dollar may prefer a smaller deal it considers to be a sure thing. “To some extent the Family Dollar board won't know all of the information for sure. They know what the impact of being near a Dollar General store is on their economics, but they can only suspect what the impact is on Dollar General,” Davis added. “You have to compare that to the opportunity cost here. On one side of the coin, you get $500 million and have to go through an extended antitrust review, during which you may lose key employees...and the opportunity potentially to close the deal with Dollar Tree.”