Dollar Tree Says FTC Near Ends of Merger Review

By Lisa Beilfuss 

Dollar Tree Inc. said the Federal Trade Commission has substantially completed its review of the retailer's planned acquisition of Family Dollar Stores Inc. and has identified about 340 stores for divestiture.

The company had indicated in February that it expected the agency to require the divestiture of no more than roughly 300 stores, though it warned at that time the FTC was reviewing more than 500 locations.

The low number of potential divestitures was a key factor in the decision of Family Dollar shareholders earlier this year to vote for Dollar Tree's takeover bid instead of a higher offer from market leader Dollar General Corp.

Dollar Tree said Tuesday that it expects all or almost all of the stores to be divested to be Family Dollar locations. The shops represent about $47.4 million of operating income, according to the Dollar Tree.

Dollar Tree said it continues to make progress with potential buyers for the locations and has received multiple indications of interest. Each of the potential suitors intends to operate these divested locations as dollar stores to address the FTC's concerns, it added.

Dollar Tree intends to close the merger in May but said the timing is subject to certain factors beyond its control, including FTC approval.

Family Dollar shareholders overwhelmingly approved a deal in January to be sold to Dollar Tree, choosing regulatory certainty over a riskier--but higher--offer from Dollar General, which had long eyed buying up its main competitor.

Those plans were derailed when Dollar Tree swooped in last summer with a cash and stock takeover proposal. Dollar General came in three weeks later with a higher all-cash offer, but it failed to satisfy concerns on Family Dollar's board that combining the biggest two dollar store chains would face significant antitrust hurdles.

Shares in Dollar Tree rose about 1% to $81.30 in after-hours trading, while shares in Family Dollar were unchanged.

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