The No. 1 dollar store chain apparently doesn’t like the thought of becoming No. 2. Hot off the heels of Dollar Tree’s $8.5 billion offer to acquire Family Dollar, Dollar General is reportedly considering getting in on the action with a counterbid of its own.
Bloomberg reports that Tennessee-based Dollar General is working with an adviser to evaluate its options when it comes to an attempt to outbid Dollar Tree for the No. 3 dollar store chain.
Last week, Virginia-based Dollar Tree announced that it would acquire Family Dollar, headquartered in North Carolina, to create a new top dollar store chain.
Combined, Dollar Tree and Family Dollar have more than 13,000 stores and annual revenues of $18 billion, propelling the company ahead of current dollar store leader Dollar General which operates 11,000 stores and has $17.5 billion in revenue.
Dollar General passed on an earlier chance to bid for the smaller retailer. While there is no guarantee that the larger chain will make an offer this time around, insiders put the possibility of a bid at about 50%.
If Dollar General is successful in acquiring Family Dollar, the combined company’s expected annual revenue would top $28 billion.
Dollar store chains experienced a period of high patronage during the recession when consumers traded in shopping trips to big box retailers for those at discount joints. Companies like Family Dollar and Dollar General took their popularity as a sign that consumers needed more stores, and a dollar store bubble was born.
It appeared that bubble may have been on the verge of bursting earlier this year when Family Dollar announced it would close 370 stores, reduce staff and cut prices on more than 1,00 items. It’s unclear if the proposed merger would change any of those plans.