Cleary Gottlieb represented Family Dollar Stores, in its acquisition by Dollar Tree for a combination of cash and stock. The transaction, valued at $9.3 billion at closing, combined two Fortune 500 companies to create North America’s leading discount retailer operating more than 13,600 stores with annual sales exceeding $19 billion. The deal was signed on July 27, 2014 and closed on July 6, 2015.
This transaction marks the culmination of a five and a half year client relationship that has included the adoption of shareholders rights plans on three different occasions, two publicly announced unsolicited takeover proposals that the Board rejected, and a revolving door of vocal activist shareholders with significant equity positions, including Trian, Pershing Square, John Paulson, Elliott Management and Carl Icahn. Following announcement of the transaction, the parties’ chief competitor, Dollar General, launched a hostile competing bid that was higher in nominal dollars, but which the Family Dollar board rejected as not being reasonably likely to be completed on the terms proposed, based on antitrust regulatory considerations. A well-publicized battle of antitrust experts then ensued, with Cleary lawyers drafting multiple press releases and participating in shareholder meetings to explain the Family Dollar Board’s conclusions, which reflected input that the Cleary team was able to elicit from the Federal Trade Commission. In a lengthy opinion, the Delaware Court of Chancery praised the processes that the Family Dollar Board had undertaken under the guidance of Cleary Gottlieb. Family Dollar shareholders ultimately approved the Dollar Tree transaction on January 22, 2015. The parties then negotiated a divestiture package of 330 Family Dollar stores with the FTC and a third party buyer, clearing the way for FTC approval of the Dollar Tree merger on July 2, 2015.