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Dollar Tree buying Family Dollar for $8.5 billion

The Dollar Tree Store
NEW YORK (AP) - Dollar Tree is buying rival discount store Family Dollar in a cash-and-stock deal valued at about $8.5 billion.

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.

Family Dollar stockholders will own somewhere between 12.7 percent and 15.1 percent of Dollar Tree's outstanding common shares at closing.

Core customers for bargain stores and major retailers like Wal-Mart have been among the hardest hit by the recession and its aftermath because of job instability.

Family Dollar has struggled and has attempted to reinvigorate sales by lowering prices on almost 1,000 basic items. It's cut some jobs and shuttered underperforming stores. The company had been conducting a strategic review since the winter, and investor Carl Icahn urged Family Dollar last month to put itself up for sale.

Dollar Tree CEO Bob Sasser said Monday that the deal will give Dollar Tree more than 13,000 stores in the U.S. and Canada. That is nearly three times as many stores as Wal-Mart Stores Inc., though Wal-Mart's square footage is still greater.

The combined Dollar Tree-Family Dollar chain will have sales of more than $18 billion and Sasser says that the transaction will create a more diverse company with an enhanced geographic reach.

Dollar Tree stores sell products for $1 or less, while Family Dollar's pricing is much broader.

Dollar Tree will continue to operate under the existing Dollar Tree, Deals, and Dollar Tree Canada store signs. It will keep the Family Dollar brand as well.

Family Dollar Chairman and CEO Howard Levine will still lead those stores and report to Sasser. He will join Dollar Tree's board.

Dollar Tree plans to finance the deal with available cash, bank debt and bonds.

The boards of both companies have 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., based in Charlotte, North Carolina, surged more than 21 percent before the opening bell. Shares of Dollar Tree Inc., based in Chesapeake, Virginia, are up more than 3 percent.

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cptfritz July 28 2014 at 8:26 AM

Maybe it will improve the Family Dollar. One in our town is nasty and has nasty cashiers

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coopdabomb July 28 2014 at 8:55 AM

Well I guess dad was wrong, money does grow on trees

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fkfrakes8 July 28 2014 at 9:21 AM

New name Family Dollar Tree ?
By the way - saw A&P is merging with Stop N Go - going to call it Stop N P

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1 reply
you sweet thing fkfrakes8 July 28 2014 at 4:11 PM

LOL, and Aloha Airlines and Hawaiian Airlines merged so they took the ha from Aloha and the Ha from Hawaiian and now call it haHa airlines! Just kidding!

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you sweet thing July 28 2014 at 4:10 PM

Look at how those dollar bills pile up!

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barbara July 28 2014 at 2:00 PM

I hope Dollar Tree's prices don't go up.

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yellowberry3535 July 28 2014 at 1:43 PM

but...what about Deal$.inc. that store is dollar tree's answer to family dollar.

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1 reply
webreader yellowberry3535 July 28 2014 at 2:09 PM

Exactly! I love Deal$. Lots of great dollar stuff :)

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e2dd July 28 2014 at 1:18 PM

Dollar tree sell very good products, better than 99c only stores and the staff are always pleasant and helpful.

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Dave July 28 2014 at 9:48 AM

Isn't there a law against Monopolies? I'm pretty sure there is. More and more buy outs and less competition means everything will cost more

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1 reply
you sweet thing Dave July 28 2014 at 4:12 PM

You have just discovered the crux of the obamacare debate.

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Kay July 28 2014 at 9:36 AM

We have a Family Dollar store in my area that I used to visit at least once a week. Recently though they let the manager go for some "dumb" reason and the store has gone down hill since. When the lady was still manager the shelves were always stocked and the store was neat and clean. I one time asked her if she had a bed in the back of the store because no matter when or what time I visited the store, she was there. Then they brought in a new manager and the store is a mess now. You can't get down half the aisles, and not one person is friendly. In fact when I walked in the new manager would look at me and turn away without acknowledging me. Same thing happened with a friend. Half the shelves are empty or in disarray. I did contact the company and a district manager called me to tell me how wonderful this new manager was. I laughed at him. Before there were always people in the store and cars in the lot, now there is hardly anyone in the store and no cars in the lot.

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GUNSLINGER July 28 2014 at 9:22 AM

Mexican border "INVASION"? What Mexican border "INVASION"?

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