Dollar Tree (NASDAQ:DLTR) announced it would acquire Family Dollar in a stock deal worth $8.5 billion.
Under the agreement, Dollar Tree will take over operating duties of more than 13,000 Family Dollar stores in 48 states and five Canadian provinces, bringing in $18 billion worth of annual sales.
The deal was unanimously approved by the boards of directors of both companies.
"This is a transformational opportunity," said Bob Sasser, Dollar Tree's CEO. "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."
Sasser predicts the merger will allow for a broader assortment of merchandise, which in turn will attract a wider array of customers.
Sasser added that Dollar Tree has a history of consistent, profitable grown and strong financial performance. The new acquisition will help position the brand as a leader in value retailing.
"This acquisition will extend our reach to lower-income customers and strengthen and diversify our store footprint. We plan to leverage best practices across both organizations to deliver significant synergies, while we accelerate and augment Family Dollar's recently introduced strategic initiatives," said Sasser.
Howard Levine, chairman and CEO of Family Dollar, says the acquisition is the culmination of a strategic process that began this past winter.
"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," said Levine. "I am excited about our future with Dollar Tree, and I look forward to working with the Dollar Tree team to complete the combination as quickly as possible to realize the compelling benefits for all our stakeholders."
Family Dollar recently announced that their stores would start carrying beer and wine after reports of weak quarterly earnings. In the spring, the retailer announced it would close 370 underperforming stores.
The company will continue to operate under both the Dollar Tree and Family Dollar brands. The merger between the two leading discount retailers is expected to close by the end of the year.
-See this Family Dollar press release
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