NEW YORK – Dollar General Corp. is weighing a bid for Family Dollar Stores Inc. that would challenge Dollar Tree Inc. takeover of the discount retailer, people with knowledge of the matter said in a report from Bloomberg yesterday.

According to the report, Dollar General is working with an adviser to evaluate its options and knows that banks are willing to finance a counterbid, following the announcement last week that Family Dollar agreed to be acquired by Dollar Tree for approximately $8.5 billion.

While Dollar General had earlier passed on the chance to bid for Family Dollar, Bloomberg reports that the company  — currently the channel leader — is re-evaluating its options out of concern that the smaller retailer may soon be out of its reach for good, according to unnamed sources. There is no guarantee that it will make an offer, the people said, with one putting the chance of a bid at 50%.

Back in 2012 in our NACS Show issue, NACS Magazine addressed the challenge for convenience stores as dollar stores ramped up their competition for customers in the article, “Race for Space.”