Dollar General said Monday it offered $78.50 a share in cash, or about $8.95 billion, to buy rival Family Dollar Stores Inc., topping Dollar Tree Inc.’s offer for the company three weeks ago.

Shares of Dollar General jumped 11% to $63.90 in recent premarket trading.

The combination of the two discount chains would have about 20,000 stores in 46 states, with sales of more than $28 billion, Dollar General said.

“For Family Dollar shareholders, our proposal is financially superior to the curren

Dollar General

Dollar Tree is buying rival discounter Family Dollar for $8.5 billion, significantly broadening its reach as it looks to fend off Wal-Mart, which has been stepping up its courtship of lower-income customers.

The deal makes Dollar Tree the biggest player in the dollar store segment, with its more than 13,000 combined locations eclipsing current leader Goodlettsville-based Dollar General Corp., which has about 11,300.

Analysts had hinted for months that Dollar General might make

Family Dollar plans to cut some jobs and close about 370 underperforming stores as it tries to reverse sagging sales and earnings. The discount store operator will also lower prices on about 1,000 basic items. (Bloomberg News photo by Daniel Acker) Photo: ACKER, BLOOMBERG NEWS

Dollar stores are feeling the pinch from mounting financial pressures on low-income shoppers.

Family Dollar said Thursday that will cut jobs and close about 370 under-performing stores as it tries to reverse sagging sa