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Virginia residents could be impacted by acquisitions

Discount stores Dollar General and Dollar Tree are in a fight to acquire Family Dollar in a climate that has seen an increase in mergers and acquisitions. The reasons cited for the rise in such transactions are low interest rates to finance these deals as well as more money being invested in companies through the stock market. In addition, businesses hope that mergers will improve profits in an economy that is still sluggish.

Other major brands that are in merger talks include Chiquita Brands and Electrolux. Chiquita was planning to merge with a company in Ireland but is now being pursued by a pair of companies based in Brazil. Electrolux is reportedly considering a purchase of General Electric's appliance division. Harris Teeter was acquired by Kroger while US Airways merged with American Airlines to become the world's biggest airline.

Current interest rates to borrow money to buy companies range from 4 to 5 percent. Although some Fortune 500 companies are being acquired, most transactions are involving companies with annual revenues of between $5 million and $10 million. So far in 2014, approximately $2.2 trillion in deals have been announced, which is an increase of roughly 70 percent from last year. It is partially due to companies taking any action that they can to grow revenues in an economy growing at only 2 percent annually.

In a poor economy, mergers and acquisitions often help both companies involved. A company that is flush with cash may decide to buy out a struggling competitor with a niche audience that can help the acquiring company in the long-term. Business acquisition attorneys may be able to help both buyers and sellers work out a deal that maximizes both the consideration received by the seller and the potential return to the buyer.

Source: The State, "Family Dollar fight part of a wave of U.S. merger activity ", Deon Roberts, August 19, 2014

Source: The State, "Family Dollar fight part of a wave of U.S. merger activity ", Deon Roberts, August 19, 2014