Dollar Tree will now operate more than 13,000 stores in 48 states and five Canadian providences. Projected annual sales are expected to exceed $18 bllion dollars.
Both stores will continue to operate and open separate stores throughout North America, targeting suburban, rural and urban areas.
The merger will help both stores expand its consumable merchandise, home products and variety/seasonal merchandise in both Dollar Tree and Family Dollar stores.
Dollar Tree expects to generate significant efficiencies in sourcing and procurement, SG&A leverage, distribution and logistics efficiency, and through format optimization. Dollar Tree anticipates that the transaction will result in an estimated $300 million of annual run-rate synergies to be fully realized by the end of the third year post-closing.
The transaction, which was approved unanimously by the Boards of Directors of both Dollar Tree and Family Dollar, is expected to close by early 2015. Family Dollar shareholders will receive $59.60 in cash and $14.90 equivalent in Dollar Tree shares, subject to the collar described below.
At closing, Family Dollar shareholders will own no less than 12.7 percent and no more than 15.1 percent of the outstanding common stock of Dollar Tree. Howard R. Levine and Trian Fund Management, L.P. and funds managed by it, which collectively own approximately 16 percent of the outstanding stock of Family Dollar, have entered into voting agreements in support of the merger.
“I have long admired the Family Dollar brand and its key position in the minds of the consumer,” says Bob Sasser, chief executive officer, Dollar Tree. “We are excited about the prospects for the combined company and the many opportunities that it will create for our associates, vendors, business partners, and shareholders.”