Why Jefferies Cut Family Dollar As Potential Merger Approaches
In a report published Friday morning, Jefferies downgraded Family Dollar Stores, Inc. (NYSE: FDO) from Buy to Hold, and trimmed its price target from $85 to $76, leaving little space for upside.
According to the report, the research firms expects no more bids from Dollar General Corp. (NYSE: DG) and sees the proposed merger -- which is to be approved or rejected next week -- highly likely at a price of around $76 per share.
Related Topic: Barclays Says Family Dollar Merger Delay Is 'Harmful'
The analysts noted, "With its release today, DG did not increase their store divestiture commitment or purchase price, effectively bowing out of the process as FTC divestiture requirements appear too high."
"It would have been imprudent to commit to a much higher number of store divestitures to engage FDO with only hopes of talking the FTC down. While we are disappointed, we believe this was the right decision for DG. However, with DG out of the picture, we don’t expect any higher bids for FDO."
Shares of Family Dollar recently traded at $75.04, down 0.13 percent.
Latest Ratings for FDO
Jan 2015 | Jefferies | Downgrades | Buy | Hold |
Jan 2015 | Deutsche Bank | Maintains | Hold | |
Oct 2014 | Deutsche Bank | Maintains | Hold |
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