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Dollar Tree Defeats Dollar General In Bid For Family Dollar

Dollar Tree, Family Dollar

Dollar Tree has emerged victorious in its bid for the Family Dollar chain, as Family Dollar shareholders voted Thursday to approve a merger with chain. The deal also quashes Dollar General’s pursuit of Family Dollar.

As The Wall Street Journal reports, Dollar General had long eyed buying up its main competitor, but those plans were derailed when Dollar Tree swooped in last summer with a cash and stock offer now worth $8.7 billion. Dollar General came in three weeks later with a $9.1 billion all-cash offer, but it failed to satisfy concerns on Family Dollar’s board hat combining the two biggest dollar store chains would face significant antitrust hurdles.

After the deal, Dollar General, the biggest of the three dollar stores, will face a larger competitor that will have more locations around the country, the newspaper says. The new Dollar Tree will keep both brands and operate both dollar store models—Dollar Tree’s, where all items are sold for $1, and Family Dollar’s model, where everyday goods and groceries are sold at a variety of discount prices.

“Today’s vote of approval by Family Dollar shareholders represents a crucial step toward combining Dollar Tree, North America’s leading fixed-price point discount retailer, with Family Dollar, a leading multi-price point retailer with a 50-plus year history of serving low and middle income customers”, said Dollar Tree CEO Bob Sasser. “By adding Family Dollar to our portfolio of brands, Dollar Tree will soon operate more than 13,000 stores in 48 states and five Canadian provinces with annual sales exceeding $18 billion. This merger enhances our geographic footprint and diversifies our business model. We intend to operate and grow both banners. At Dollar Tree stores, everything is $1 while Family Dollar stores will continue to serve low to middle income customers with name brand consumables, home basics, variety and seasonal products at discount store prices. By utilizing the $1 fixed-price point in Dollar Tree and multi-price points at Family Dollar, we will deliver even greater value and choice to a broader range of consumers.

“We are eager to welcome Family Dollar associates to the Dollar Tree team,” he added. “We appreciate the dedication and hard work of Family Dollar’s associates throughout the integration planning process and we look forward to working together to further grow and improve the Family Dollar brand.”

Several steps need to take place to facilitate the successful completion of the acquisition. By the end of January, Dollar Tree expects to reach a preliminary agreement with the Federal Trade Commission staff on the list of substantially all of the stores to be divested. Dollar Tree then plans to finalize divestiture agreements with the selected buyer(s), to address any concerns of the investigating state attorneys general and to execute a consent order with the FTC’s Bureau of Competition. To facilitate the FTC’s continued review, and in light of the practicalities associated with the transaction, Dollar Tree and Family Dollar have agreed to provide the FTC with four weeks’ notice prior to closing. Dollar Tree expects to initiate this four-week notice period (which may be terminated early by the FTC) after Dollar Tree executes a consent decree with the FTC’s Bureau of Competition, which should enable the closing of the merger as soon as March.

“I am extremely proud of the entire Dollar Tree team,” Sasser said. “In addition to completing the due diligence and integration planning work relating to our acquisition, our team worked together to deliver two outstanding quarters during the acquisition process by continuing to provide great values to our consumers.”

Dollar General Chairman and CEO Rick Dreiling released a statement today following the merger announcement, calling the vote “a loss not only for Family Dollar shareholders, but also for consumers across the country who will not have the opportunity to benefit from the cost savings and efficiencies that we believe would have been created by a merger between Dollar General and Family Dollar.

“As we have said throughout this process, the scale of this combination would have provided better value and greater selection to customers of both Dollar General and Family Dollar,” he said. “Despite our best efforts over the past few months, Family Dollar’s lack of engagement and a contracted transaction timeline ultimately prevented us from completing this transaction.”

“Dollar General is an extraordinary company with a promising future,” Dreiling added. “I am excited to remain with the company for another great year as we look to capitalize on the numerous opportunities ahead of us. We have been and remain focused on Dollar General’s core business, and we are confident that Dollar General is well positioned for sustainable growth and shareholder value creation going forward. As always, we will continue to look for ways to provide our customers with the everyday low prices that they count on from Dollar General.

Additionally, Dollar General says Rick Dreiling will continue as chairman and CEO through Jan. 29, 2016 or, if earlier, the appointment of a successor. He had originally planned to retire May 30, 2015.

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