Dollar General enters bidding for Family Dollar

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The nation's top dollar store chains are betting big that their once-thriving business will make a comeback if they band together.

Dollar General, the nation's largest dollar-store chain, started a bidding war on Monday when it offered approximately $8.95 billion for rival Family Dollar. It was an attempt to trump Dollar Tree, which agreed to acquire Family Dollar for $8.5 billion last month.

The bidding war comes as the chains look for ways to grow sales and market share at a time when their core low-income customers remain financially stretched during the economic recovery. The companies have hit a particularly rough patch after years of expanding rapidly during the recession when people shopped more at dollar stores to save money. Now, the companies are hoping they'll be more profitable and efficient if they consolidate.

Ken Perkins, president of RetailMetrics LLC, a retail research firm, said any merger will wind up being good for customers. At a time when shoppers are "extremely deal oriented," a merger will enable the companies to use their scale to lower the overall costs of purchasing goods, which will help bring prices lower.

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