Dollar General is raising its all-cash bid for Family Dollar Stores to $80 a share, or about $9.1 billion.
Under the revised proposal, Dollar General is willing to sell up to 1,500 stores if required by the Federal Trade Commission, even though it feels its pledge to divest 700 stores in its prior proposal provides more than enough cushion to clear any regulatory review.
Dollar General said it hired Richard Feinstein of Boies, Schiller & Flexner to independently review the company's antitrust work. Until June 2013, Feinstein was the director of the FTC's Bureau of Competition. Feinstein concurred with the view that the transaction could be completed on the terms previously proposed, the company said.
Shares of Family Dollar moved higher in premarket trading following the report. (Click here for the latest quote.)
The latest bid includes a $500 million reverse breakup fee—a penalty paid to the target company if the acquirer backs out of the transaction.
On Aug. 21, Family Dollar rejected a $78.50 a share bid from Dollar General, citing antitrust issues. Family Dollar instead has been recommending a cash and stock proposal from Dollar Tree, valued at about $8.5 billion.
Read MoreDollar General says it's committed to Family Dollar
"We are confident that our enhanced proposal sufficiently addresses any concerns that led Family Dollar's board of directors to reject our prior proposal without any discussions between our companies," Dollar General chief Rick Dreiling said in a press release.
Dollar General said its proposal provides Family Dollar shareholders with about $640 million of additional value over Dollar Tree's offer and represents a premium of about 32 percent over the closing price of Family Dollar stock on July 27, the day before the Dollar Tree announcement.
Last week, Dollar General said it remained committed to the acquisition, as it reported second-quarter earnings that met expectations. Revenue and same-store sales fell short of expectations, however. The discount retailer blamed a competitive environment and a cautious consumer.
—By CNBC anchor and New York Times reporter Andrew Ross Sorkin