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Dollar Tree Buying Family Dollar Retail Chain

28 Jul, 2014 By: Erik Gruenwedel


$8.5 billion merger combines more than 13,000 stores across 48 States and five Canadian provinces, with annual sales exceeding $18 billion


The retail market for rural and suburban America took a major step in consolidation as Dollar Tree July 28 announced it entered into a merger agreement with Family Dollar in a cash and stock transaction valued at $8.5 billion.

Dollar Tree is the largest operator of fixed-price point stores (except in California, which is led by 99 Cents Only Stores) selling everything for $1 or less, and Family Dollar is a national operator of multi-price point locations. Dollar Tree intends to retain and to grow each of its brands and the Family Dollar brand going forward and will optimize the combined real estate portfolio. Both chains would continue to operate under their respective brand names.

The merger between Chesapeake, Va.-based Dollar Tree and  Matthews, N.C.-based Family Dollar combines more than 13,000 stores across 48 States and five Canadian provinces, with annual sales exceeding $18 billion.

The two chains, which actively sell discount studio movie DVDs via third-party point-of-purchase displays from Echo Bridge Entertainment and others, expects to save upwards of $300 million in annual cost synergies within three years after the close of the sale, which is expected to happen in 2015. Family Dollar began hosting Redbox kiosks in 2012.

In addition, the transaction puts increasing pressure on Walmart, which saw its profit drop 5% during the most-recent fiscal period – due in part to Dollar Tree. Walmart just replaced its U.S. chief executive.

"This is a transformational opportunity," Dollar Tree CEO Bob Sasser said in a statement. "With the acquisition, Dollar Tree will become a leading discount retailer in North America with … more than 145,000 associates on our team. 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.”

Family Dollar CEO Howard Levine will join Dollar Tree’s board upon completion of the deal.

 

 


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