Dollar Tree Acquires Family Dollar for $8.5 Billion

Dollar Tree Inc., the famous discount variety chain store announced Monday that it has agreed to acquire rival company Family Dollar Inc for a deal worth $8.5 billion.

According to the deal, Dollar Tree and Family Dollar will form a new company once the acquisition is done. The deal will give Family Dollar shareholders $59.60 in cash and Dollar Tree shares worth $14.90 for each unit they own.

Dollar Tree will reportedly finance the deal through a combination of cash and stock where it will be paying $74.50 for each Family Dollar share - a 22.8 percent premium on the company's closing price as of July 25, 2014. It will also assume Family Dollar's debt, which values the transaction at $9.2 billion.

The deal has been unanimously approved by the boards of both the companies and it is expected to close by early 2015.

"This is a transformational opportunity," Bob Sasser, CEO of Dollar Tree said in a statement.

"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. By offering both fixed-price and multi-price point formats and an even broader, more compelling merchandise assortment, we will be able to provide even greater value and choice to a wider array of customers," Sasser added.

The merger will maintain both Family Dollar and Dollar Tree brands. Through the acquisition, Dollar Tree will become one of the leading companies in the discount retail market "with over 13,000 stores in 48 states and five Canadian Provinces, sales of over $18 billion, and more than 145,000 associates."

Family Dollar is also pleased with the deal.

"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. 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," Howard R. Levine, chairman and CEO of Family Dollar added in the statement.