CHESAPEAKE, Va.-In a cash-and-stock deal, Dollar Tree has reached an agreement to purchase Family Dollar for about $8.5 billion, or about $74.50 per share.
The transaction, which is slated to close in early 2015, will create a retailer of more than 13,000 stores in 48 states and five Canadian provinces. Annual sales for the combined company will total more than $18 billion after the deal closes. Bob Sasser, Dollar Tree’s CEO, said the company will continue to operate under the Dollar Tree, Deals, Dollar Tree Canada and Family Dollar nameplates.
Howard Levine, chairman and CEO of Family Dollar, will remain with the combined company and report to Sasser. Levine will also become a member of Dollar Tree’s board of directors.
Describing the transaction as “a transformational opportunity” for Dollar Tree, Sasser said, “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.”
Levine said the deal is the culmination of the strategic review process that the Family Dollar board of directors began this past winter. Citing Dollar Tree’s “rich history of providing great value to customers,” Levine added that “as one company, we can provide more customers with even greater value and convenience. This combination will enable Family Dollar to accelerate efforts to improve the business and will benefit our dedicated team members who will now be part of a larger, more diverse organization.”
Dollar Tree said it would finance the deal through a combination of existing cash on hand, bank debt and bonds.