Family Dollar is set to merge with the Dollar Tree in a cash-and-stock deal worth $8.5 billion.
Under the terms of the deal, which was approved by both companies’ boards of directors, Dollar Tree DLTR has agreed to pay $74.50 per share in the cash-and-stock deal to buy Family Dollar. The valuation of that offer is a roughly 23% premium over Family Dollar’s FDO closing price on Friday. Dollar Tree, which expects the deal to close by early next year, will pay $59.60 in cash and the rest in shares. At closing, Family Dollar shareholders will own some shares in the merged company.
This merger puts rival Dollar General in last place. In fact, there has been speculation that Dollar General may be looking to bailout in 2015 if their stock do not rise.
All three chains target lower-income consumers, though Dollar Tree sells everything in its stores for $1 or less, while Family Dollar has multiple price points to court value-conscious shoppers.
Dollar Tree plans to continue to operate both the Dollar Tree and Family Dollar brands. Dollar Tree stores sell all items for $1 or less and CEO Bob Sasser told investors Monday they will continue to do so. Family Dollar stores sells many items for more than $1 and will stay with that pricing policy as well.
Investors said this merger may prevent the closing of more than 300 stores.
Ocala Post asked store clerks how they felt about the merger, however, they said they were unable to speak about it.
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