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Dollar Tree steps up fight, buys Family Dollar

Published on NewsOK Modified: July 28, 2014 at 2:22 pm •  Published: July 28, 2014
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In a statement, Icahn said he was "extremely pleased" with Dollar Tree's plans, but that he still thinks there are "a handful of potential buyers who could realize greater synergies" with Family Dollar.

The companies did not say if any Dollar Tree or Family Dollar stores would be closed. Dollar Tree, which has about 5,000 locations, will continue to operate under the existing Dollar Tree, Deals, and Dollar Tree Canada store banners. It will keep the Family Dollar brand as well, with Chairman and CEO Howard Levine reporting to Sasser.

Representatives for Wal-Mart and Kroger weren't immediately available for comment. A representative for Dollar General, which last year reported sales growth of 9 percent, declined to comment.

Stockholders of Family Dollar Stores will receive $59.60 in cash and the equivalent of $14.90 in shares of Dollar Tree for each share they own. The companies put the value of the transaction at $74.50 per share, which is an approximately 23 percent premium to Family Dollar's Friday closing price of $60.66.

Including debt and other costs, the companies estimate the deal to be worth more than $9 billion.

Family Dollar stockholders will own somewhere between 12.7 percent and 15.1 percent of Dollar Tree's outstanding common shares at closing. Dollar Tree plans to finance the deal with available cash, bank debt and bonds.

The boards of both companies unanimously approved the deal, which is expected to close by early next year. It still needs approval from Family Dollar shareholders.

Shares of Family Dollar Stores Inc., which is based in Charlotte, North Carolina, surged $14.89 to $75.55 in premarket trading. The record high during regular trading is $75.29.

Shares of Dollar Tree Inc., based in Chesapeake, Virginia, jumped 10 percent, or $5.50 to $59.72. The all-time high for that stock is $60.19.

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