Dollar Tree may sell stores in Family Dollar deal
Dollar Tree has said it may have to divest some stores to secure the deal
Dollar Tree has said it may have to divest some stores in order to gain approval for its acquisition of Family Dollar Stores.
Dollar Tree said it does not believe it will need to shed more than the up to 500 stores it previously indicated it was willing to sell, and that it doesn't expect any of the store sales to have a material impact on the pending acquisition.
The US$8.5bn acquisition is expected to be completed as early as February, the company said in its update. It has faced competition for Family Dollar from rival Dollar General, which last month once again extended the deadline for its tender offer to acquire Family Dollar.
Nonetheless, Dollar Tree said it will work with the Federal Trade Commission over the next few weeks to determine what divestitures will be required.
The FTC has raised concerns regarding Family Dollar's current pricing rules applicable to certain stores where prices may increase if a local Dollar Tree was not present. It also pointed to certain overlaps between Family Dollar and multi-price Deals stores, and certain areas where Family Dollar and Dollar Tree face only a limited number of competitors.
On Friday (5 December), Dollar Tree said it believed the FTC may require divestitures "far in excess" of the 1,500 stores Dollar General has offered to divest for a deal.
In response, Dollar General said its own documents and data "tell a very different story" from that contained in the Dollar Tree update.
The special meeting of Family Dollar shareholders to vote on the pending merger is currently scheduled for 23 December.
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