Activist investor Carl Icahn is likely enjoying a banner morning somewhere on the announcement that Family Dollar has officially decided to sell out to inexpensive retail rival Dollar Tree for the not quite bargain basement price of $8.5 billion. Icahn owns a 10 percent stake in Family Dollar and officially advocated for such a sale on his blog last month. He also threatened a potentially ugly fight for seats on the company’s board if it did not explore the possibility of selling out.
Family Dollar representatives maintain they have been considering such a sale since early 2014, before Icahn’s investment and advocacy.
As a combined force in discount retail, the companies are worth about $18 billion in revenue and will hold 13,000 stores in 48 states and in Canada. Dollar Tree, which true to its name only sells good for $1, will remain a separate brand from Family Dollar—which will carry on selling items at a variety of (low) price points.
As a single business dedicated to bringing consumers their good at or near the $1 price point, the companies aspire to $300 million a year in costs savings as soon as three years after the deal closes.
“This is a transformational opportunity,” Bob Sasser, Dollar Tree’s chief executive, said in a statement. “Throughout our history, we have strived continuously to evolve and improve our business. This acquisition, which enhances our footprint and diversifies our company, will enable us to build on that progression, and importantly, positions Dollar Tree for accelerated growth.”
Dollar Tree will pay $74.50 for each share of Family Dollar.
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