Dollar General Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of retailer Dollar General (NYSE: DG  ) added multiple dollars to their price tags, climbing as much as 17% in intraday trading.

So what: Nelson Peltz's Trian Fund Management wants take Dollar General rival Family Dollar (NYSE: FDO  ) private for $55 to $60 per share. At the midpoint of that range, the offer represents a 31% premium over Family Dollar's previous closing price.

Now what: The dollar-store concept has been hot, thanks to the recession and consumers' penny-pinching (dollar-pinching?) efforts. The offer for Family Dollar obviously has gotten investors excited about potential future action in the sector. Dollar Tree (Nasdaq: DLTR  ) was up as much as 10% today, while 99 Cents Only (NYSE: NDN  ) rose 8% earlier in the day.

Dollar General was taken private by KKR (NYSE: KKR  ) in 2007, reentering the public markets in 2009. KKR still owns a hefty chunk of the company, which carries a heavier debt load than its close competitors, making any takeover relatively unlikely. More deal activity in the sector could continue to stoke excitement, but investors probably want to focus on Dollar General's operations, rather than deal speculation.

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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool’s disclosure policy prefers dividends over a sharp stick in the eye.


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