Merged company stands as formidable competitor for drug chains
Dollar Tree said Monday that under the merger agreement announced and unanimously approved by each company’s board in July 2014, Family Dollar shareholders will receive $59.60 in cash and 0.2484 of a share of Dollar Tree common stock for each share of Family Dollar common stock. The total deal isvalued at about $8.5 billion.
The merger creates a formidable competitor for drug chains, discount stores and other mass retailers. Overall, the combined company will operate more than 13,000 stores in 48 states and five Canadian provinces and have sales over $19 billion annually and more than 145,000 employees.
Plans call for the company to retain and grow both store banners and optimize the combined real estate portfolio. Dollar Tree stores sell everything for $1 or less, while Family Dollar stores offer products at multiple price points.
Dollar Tree noted that the merger will enable it to target a broader range of customers and geographies. The company said Dollar Tree targets customers “within a broad range of Middle America” with its stores located primarily in the suburbs, while Family Dollar targets low- and lower-middle income households via its urban and rural locations.
“We are pleased to announce we have completed our acquisition of Family Dollar, and we formally welcome the Family Dollar team to the Dollar Tree organization,” Bob Sasser, chief executive officer of Dollar Tree, said in a statement. “This is a transformational opportunity for our business to offer broader, more compelling merchandise assortments, with greater values, to a wider array of customers. This acquisition will extend our reach to low-income customers while strengthening and diversifying our footprint. We plan to leverage best practices across both organizations to deliver significant cost synergies. Combined, our growth potential is enhanced with improved opportunities to increase store productivity and to open more stores across multiple banners.”
Also on Monday, Dollar Tree announced that president and chief operating officer Gary Philbin has been named to the same position at Family Dollar, effective immediately. In the new role, Philbin will continue to report to Bob Sasser.
In addition, Dollar Tree said that Family Dollar CEO Howard Levine has been appointed to Dollar Tree’s board, effective immediately.
“We appreciate the efforts, dedication and teamwork displayed by both Dollar Tree and Family Dollar associates throughout our integration planning processes,” Sasser added. “We are well-prepared to integrate our two companies.”
Dollar Tree had engaged in a six-month battle with rival Dollar General Corp. to acquire Family Dollar. In September 2014, Dollar General announced a hostile bid to acquire Family Dollar. But the duel over the dollar store chain ended in January of this year, when Family Dollar shareholders voted in support of merging with Dollar Tree. Shortly after the vote, Dollar General ended its pursuit of Family Dollar.