Dollar General CEO Rick Dreiling may have shot himself in the foot.
Dreiling, in unveiling his $8.95 billion hostile bid for rival Family Dollar on Monday, said he considers the smaller discount chain more of a threat to business than Walmart express stores.
“The hits we’ve taken on [Walmart] so far have actually been less than what happens when a Family Dollar opens up,” the 60-year-old CEO of the No. 1 dollar store chain said.
Seemingly a throwaway line at the time, it took on much more significance on Thursday after Family Dollar rebuffed Dreiling’s overture.
Family Dollar said it would remain hitched to a rival, albeit lower, offer from Dollar Tree, a third discount store chain, which has offered $8.5 billion.
Family Dollar, the No. 2 chain, said it feared anti-trust issues would put the kibosh on a Dollar General-Family Dollar union.
So, it now appears that Dreiling unintentionally made the case for Family Dollar’s rejection, a source close to the situation said.
The Federal Trade Commission would take note of Dreiling’s comment, the source said.
“Absolutely that comment will haunt him,” the source said.
Family Dollar’s shares fell by less than 1 percent on Thursday to $79.41. Dollar General slipped 0.3 percent to $63.61.
Now Dreiling, if he sweetens his offer and reaches a deal with Family Dollar, will need to disprove his Monday quote.
The FTC, in reviewing this potential merger, would largely look at how the two chains price items and whom they regard as their chief competitors.
Dollar General declined comment and Family Dollar did not return calls.