Mergers & Acquisitions

Dollar Tree, Family Dollar Agree to Sell 330 Stores

FTC approves 35-state divestiture as condition of merger

WASHINGTON -- Discount retailers Dollar Tree Inc. and Family Dollar Stores Inc. have agreed to sell 330 Family Dollar stores to a private-equity firm, Sycamore Partners, to settle Federal Trade Commission (FTC) charges that Dollar Tree’s proposed $9.2 billion acquisition of Family Dollar would likely be anticompetitive.

Dollar Tree Family Dollar Dollar General FTC

Family Dollar rejected a takeover bid by rival discount retailer Dollar General.

According to the FTC’s complaint, Dollar Tree and Family Dollar sell deeply discounted general merchandise items, including food, home products, apparel and accessories and seasonal items. Their stores compete head-to-head in terms of price, product assortment and quality, as well as location and customer service in local markets nationwide. The FTC identified 330 stores in local markets from 35 states where competition would be lost if the acquisition went forward as proposed.

“Dollar stores offer convenience and value by providing a broad assortment of general merchandise at discounted prices in stores close to where consumers live or work,” said Debbie Feinstein, director of the FTC’s Bureau of Competition. “This settlement will ensure that consumers will continue to benefit from competition among their local dollar stores.”

Without a remedy, according to the FTC, the acquisition is likely to lessen competition by eliminating direct competition between Dollar Tree and Family Dollar, and increasing the likelihood that Dollar Tree will unilaterally exercise market power.

The proposed settlement requires the divestitures to New York City-based Sycamore Partners to be completed within 150 days following the acquisition. In May, Sycamore Partners said it would convert the stores to the Dollar Express brand, according to a Reuters report.

The settlement includes an Order to Maintain Assets, to help ensure that Family Dollar maintains the 330 stores until they are divested. The proposed settlement also appoints a monitor to oversee the merging parties’ compliance with their obligations under the settlement agreement. Details about the divestitures, including a list of the cities in which stores will be divested, are set forth in the analysis to aid public comment for this matter.

The commission vote to issue the complaint and accept the proposed consent order for public comment was four to one, with Commissioner Joshua D. Wright voting no.

Matthews, N.C.-based Family Dollar operates more than 8,100 stores in rural and urban settings across 46 states. Chesapeake, Va.-based Dollar Tree operates 5,282 stores in 48 states and five Canadian provinces. Goodlettsville, Tenn.-based Dollar General has more than 11,000 stores in 40 states.

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