Against that backdrop, Kat readers are asked to have the following excerpt from that article read to them aloud (no peeking at the text is permitted).
“Dollar General Corp., fighting to maintain its lead in the industry, raised its bid for Family Dollar Stores Inc. (FDO) and threatened to take the offer directly to investors if it gets rejected again. Dollar General bid $9.1 billion, or $80 a share in cash, compared with an offer of $78.50 made two weeks ago that was rebuffed on antitrust concerns. Dollar General said it would sell as many as 1,500 locations, up from 700 in its previous approach, and pay Family Dollar $500 million if the deal fails on regulatory approval.In case you did not follow all of this, don’t worry—just have the text read to you aloud once again. Okay—finished? If so, it’s exam time, and here are the questions (no peaking at the text).
Today’s sweetened proposal escalates a bidding war against Dollar Tree Inc. (DLTR), which had won over Family Dollar with a July offer of $8.5 billion, or $74.50 a share -- a deal seen as more friendly to antitrust regulators. If that merger goes ahead, Dollar General risks losing its spot as the largest dollar-store chain just as Wal-Mart Stores Inc. pushes into the market with smaller-format stores. 'Family Dollar definitely has some more thinking to do,' said Poonam Goyal, a senior retail analyst for Bloomberg Intelligence. By increasing the stores it is willing to divest, Dollar General is 'definitely showing that it wants to make this deal happen.'
Family Dollar, based in Matthews, North Carolina, rose 0.5 percent to $80.22 at the close in New York. The stock had been trading above Dollar General’s rejected offer, a sign that investors expected the chain to raise its bid. Dollar General, based in Goodlettsville, Tennessee, gained 0.6 percent to $64.36 while Dollar Tree advanced 1.6 percent to $54.46.…
Both Family Dollar and Dollar General offer a variety of food and consumer goods at multiple prices and cater to low-income shoppers. Dollar Tree, in contrast, attracts more middle-class consumers and sells most items at $1.”
1. Which company is the target?And so, how many of you got all the answers right (as follows):
2. Which company made the first offer to acquire the target?
3. Which company made a later offer, which itself was thereafter improved on?
4. Which offer is more likely to raise antitrust concerns?
5. Which company will lose its preeminent position in the market segment if it fails to consummate the acquisition?
6. Which of the three companies seeks to attract more middle-class consumers and sells most of its products around the one dollar price point?
1. Family DollarHand over heart, this Kat suspects virtually no Kat readers answered all these questions correctly (this Kat had to read the report several times even to be able to provide the correct answers). The main reason that it is so difficult to answer correctly is that each of the three company names contains the word “dollar”, but the term does not have much distinctive power. Not only that, but the significance connoted by the term “dollar” is not consistent across the three companies. Only Dollar Tree actually offers most of its products for sale at more or less at a single price point-- $1.00; the other two companies appear to target a less affluent clientele, but each maintains multiple price-points. As such, one might be tempted to conclude that the word is descriptive in connection with DollarTree, but misdescriptive regarding Family Dollar and Dollar General. In any event, the real challenge is to keep the names of the three companies separate and distinct. No matter, each of the three companies has registered its respective mark(s) in the United States for retail services (query whether the same result would obtain in other jurisdictions).
2. Dollar Tree
3. Dollar General
4. Dollar General
5. Dollar General
6. Dollar Tree
Based on the foregoing, the saga of Family Dollar, Dollar Tree and Dollar General poses a trade mark challenge for this Kat. How many times have we advised clients that there is little branding value in selecting a mark in light of a crowded field of existing registrations, each of which includes a common, arguably descriptive word (such as “dollar”). We are reminded by scholars and commentators that there is a virtually infinite number of possible words that one can adopt for use as a trade mark. And yet, when it comes to these three retailers, each chose to forego adopting a strongly inherent distinctive mark in favour of adopting a mark and name centring on the word “dollar”, the better to convey various forms of the same message to consumers—we offer low-priced goods (in the one case, apparently more or less at a single price point). Not only that, but each of the companies appears to have enjoyed substantial commercial success.
More on Family Dollar, here.
More on Dollar Tree, here.
More on Dollar General, here.