Family Dollar Stores Inc. turns down buyout offer from Dollar General Corp.

Family Dollar has rejected a takeover bid from dollar-store competitor Dollar General, saying it would be too hard for the deal to pass antitrust regulators. Family Dollar's board said it supports its existing deal to be acquired by Dollar Tree.

Family Dollar Stores Inc. chairman and CEO Howard Levine said in a statement Thursday its board and advisers reviewed Dollar General Corp.'s offer and determined it wasn't reasonably likely to be completed on the terms proposed.

Dollar General chairman and CEO Rick Dreiling said in a statement the company was disappointed in Family Dollar's decision, and that it had done an extensive antitrust analysis that confirmed its proposal could be completed. Dollar General said it was willing to share its analysis with Family Dollar and it was still confident it could resolve any regulatory concerns about competition.

Dollar General said is reviewing its options and still believes its offer is better than the Dollar Tree deal.

The businesses of Family Dollar and Dollar General are more similar than Dollar Tree's. The first two sell items at a variety of prices, while at Dollar Tree, all items are a buck.

Family Dollar became a takeover target in part because of its business struggles. The Matthews, North Carolina, company has been shuttering stores and cutting prices in hopes of boosting its financial performance. In June investor Carl Icahn urged the company to put itself up for sale.

On Monday Dollar General -- the nation's biggest dollar-store chain -- offered about $8.95 billion, or $78.50 per share in cash, for Family Dollar. The Goodlettsville, Tennessee, company said at the time that it believed it could quickly address any antitrust issues and was willing to divest up to 700 of its stores in order to get the necessary approvals.

In a letter sent to Family Dollar on Wednesday, Dollar General said it believed the number of stores it was offering to divest was "more than sufficient to take this [antitrust] issue off the table."

Last month Family Dollar agreed to an $8.5 billion deal with Chesapeake, Virginia-based Dollar Tree Inc. The transaction includes $59.60 in cash and the equivalent of $14.90 in shares of Dollar Tree for each share held. The companies valued the transaction at $74.50 per share at the time. Including debt and other costs, Family Dollar and Dollar Tree estimated the deal to be worth approximately $9.2 billion.

Dollar General's stock added 4 cents to $63.80 in afternoon trading. Shares of Family Dollar shed 16 cents to $79.65, while Dollar Tree's stock fell 74 cents to $54.26.