Dollar Tree to buy Family Dollar

July 28, 2014
Dollar Tree2

By Jim Hagerty
Staff Writer

Dollar Tree will soon own 13,000 stories in the United States and Canada when its purchase of Family Dollar Stores is finalized next year.

Dollar Tree agreed to acquire Family Dollar for $8.5 billion in cash and stock Monday. Each share of Family Dollar stock will be purchased for $74.50. As of this report, shares in Family Dollar were trading at $74, while Dollar Tree were up more than 6 percent, at $57.75. When all said and done, the new company will be worth around $9 billion, making it the largest dollar-discount retailer in North America. Together Dollar Tree and Family Dollar now pull in around $19 billion in revenue.

According to reports, Dollar Tree will remain a “$1 or less” retailer, while Family Dollar will be a separate brand.

“This is a transformational opportunity,” Bob Sasser, Dollar Tree’s chief executive, said in a statement. “Throughout our history, we have strived continuously to evolve and improve our business. This acquisition, which enhances our footprint and diversifies our company, will enable us to build on that progression, and importantly, positions Dollar Tree for accelerated growth.”

The deal is expected to be finalized by early next year.

The companies expect to realize about $300 million in annual cost savings by the end of the third year after closing, which is expected by early next year.

Dollar Tree was advised by JPMorgan Chase and the law firms Wachtell, Lipton, Rosen & Katz and Williams Mullen. Family Dollar was advised by the law firm  Cleary Gottlieb Steen & Hamilton and Morgan Stanley.

It is unclear whether the transaction will please Mr. Icahn, who owns a nearly 10 percent stake and who had threatened to wage a potentially messy fight for seats on Family Dollar’s board if it did not pursue a sale.

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