In the second major merger to be announced on Monday, Dollar Tree has agreed to purchase Family Dollar for $8.5 billion. Together, the companies will form a mega -dollar store company.
Family Dollar has been feeling the pressure from investor Carl Icahn to sell itself, though it looked into alternatives for several months before agreeing to sell. The deal will be in cash and stock. Dollar Tree will pay $74.50 per share of Family Dollar, $59.60 in cash and $14.90 in stock. According to The New York Times, that price is a 23 percent premium over Family Dollar's Friday closing price. The total value including debt is $9.2 billion.
The new mega-dollar store company will have over 13,000 outlets between the U.S. and Canada and annual revenue of $18 billion. However, the two companies will still remain separate brands.
This is a transformational opportunity. 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."
It is unclear if activist investor Icahn is happy with this sale. Icahn owns about ten percent of Family Dollar.
This article is from the archive of our partner The Wire.