(Reuters) - Institutional Shareholder Services advised Family Dollar Stores Inc shareholders to vote for the retailer's acquisition by Dollar Tree Inc, reversing its previous stance.
The deal offers near certainty of closure, the proxy advisory firm said in a report.
ISS asked Family Dollar's shareholders in December to oppose Dollar Tree's $8.5 billion cash-and-stock offer, delay voting on the deal and consider Dollar General Corp's higher cash offer of $9.1 billion.
"Dollar General's near-silence on regulatory progress - particularly its failure to meaningfully follow through on its own unforced commitment to provide a meaningful update in December - speaks volumes," ISS said on Wednesday.
Dollar General, the largest U.S. discount retailer, has not provided any major updates on its talks with antitrust regulators after Family Dollar's shareholder meeting to vote on the deal was postponed for a second time on Dec. 23.
Further adjournments risked Dollar Tree walking away and there were no "material improvements" in the chances of Dollar General's bid getting antitrust approval, ISS said.
Dollar Tree said in a letter to Family Dollar last week that it was unwilling to agree to further adjournments of the shareholder vote, which is now scheduled for Jan. 22.
Dollar General was not immediately available for comment and Dollar Tree declined to comment.
Dollar Tree has said it would divest as many stores as required to get antitrust approval for the deal, while Dollar General has stuck to its offer to shed up to 1,500 stores.
The U.S. Federal Trade Commission is scrutinizing both offers over worries that a deal could inflate prices at discount stores.
Family Dollar Chief Executive Howard Levine said the company was "pleased" with ISS's latest recommendation.
(Reporting by Ramkumar Iyer and Sruthi Ramakrishnan in Bengaluru; Editing by Kirti Pandey)
