Takeover deal is set to close between Family Dollar and Dollar Tree. Deal is expected to cut costs and corporate jobs.
After a yearlong takeover deal, Dollar Tree anticipates completing its purchase of Family Dollar Monday, July 6, 2015. The takeover took some time to settle due to another buyout attempt made by Dollar General.
The takeover will end the local ownership of the retail chain, which traces its roots back to 1959.
According to a report by The Charlotte Reporter, one of the last steps needed to complete the deal was taken last week when federal regulators approved the $8.5 billion sale to Chesapeake, Va.- based Dollar Tree. The deal mandates that Family Dollar sell 330 of its stores to a private equity firm called Sycamore Partners within 150 days of closing the deal. This firm plans to operate these stores under the name Dollar Express.
Dollar Tree has claimed that the remaining Family Dollar stores will keep their names, and its headquarters will be maintained. However, the new cost-cutting measures to be implemented by Dollar Tree are expected to result in layoffs for some of the 1,300 workers at Family Dollar’s headquarters. Dollar Tree plans to cut annual expenses by $300 million in the next three years, and this will require a number of changes to the chain.
Although the combining of the companies is expected to bring the loss of corporate jobs, it is believed that the cuts will be less severe than if the $9.1 billion deal with Dollar General had been successful. The deal between Dollar Tree and Family Dollar was chosen by Family Dollar shareholders because it was more likely to be approved by antitrust regulators. The approval stems from the fact that Family Dollar and Dollar Tree have different business models, while Dollar General has similar practices to Family Dollar.
While Dollar Tree sells everything in its stores for $1 or less, Dollar General and Family Dollar sell a variety of products for $10 or less, and in recent years, Family Dollar has been raising prices. Dollar Tree intends to lower prices and improve the appearance of Family Dollar stores after the deal is closed.
After the deal is finalized, the combined company will become the largest dollar store chain in the U.S., operating approximately 13,000 locations.
