Family Dollar Stores Inc. rejected Dollar General Corp.'s $8.95 billion acquisition bid, arguing that antitrust concerns would likely prevent the deal from taking place in its current form.

The company's board voted to back the previously announced $8.5 billion merger with Dollar Tree Inc.

MATTHEWS, N.C. — Family Dollar Stores Inc. rejected Dollar General Corp.’s $8.95 billion acquisition bid, arguing that antitrust concerns would likely prevent the deal from taking place in its current form.

Family Dollar Stores Inc. rejected Dollar General Corp.’s $8.95 billion acquisition bid, arguing that antitrust concerns would likely prevent the deal from taking place in its current form.

The company’s board voted to back the previously announced $8.5 billion merger with Dollar Tree Inc.

"Our board reviewed, with our advisors, all aspects of Dollar General’s proposal and unanimously concluded that it is not reasonably likely to be completed on the terms proposed," Family Dollar chairman and chief executive officer Howard Levine said in a statement Thursday morning. "Accordingly, our board rejects Dollar General’s proposal and reaffirms its support for the pending merger with Dollar Tree."

On Wednesday night Dollar General sent a letter to Family Dollar’s board, arguing that its offer was better for the company’s shareholders than Dollar Tree’s. The letter suggested that Levine’s desire to remain CEO was a factor in the decision to merge with Dollar Tree instead. Levine is set to remain CEO of Family Dollar under the planned merger with Dollar Tree. Rick Dreiling said in the letter that he would postpone his retirement as Dollar General chairman and CEO if his company’s bid for Family Dollar were to succeed.

In his statement, Levine dismissed the allegations made in Dollar General’s letter, which he said "contained blatant mischaracterizations and did nothing to address the antitrust issues in Dollar General’s proposal."

On Thursday afternoon, Dollar General stuck by its proposal and said its bid would clear antitrust hurdles and provides Family Dollar shareholders a better valuation than Dollar Tree’s offer.

"We are disappointed that the Family Dollar board of directors has concluded that our proposal is not reasonably expected to lead to a superior proposal without informing itself of all relevant information," Dreiling said in a statement. "We have done extensive antitrust analysis using experienced advisers, the results of which confirm that the transaction as proposed is capable of being completed. We remain willing to share this analysis with Family Dollar and its counsel and are confident that we will be able to quickly and efficiently resolve any potential antitrust issues."

He added, "We are carefully reviewing and considering our options. Our existing all-cash proposal coupled with manageable antitrust issues continues to make our proposal superior to the current transaction agreement with Dollar Tree."