US retailer and NASDAQ listed Dollar Tree, Inc said it has completed the acquisition of Family Dollar Stores, Inc., also a retailer offering name brands and quality, private brand merchandise.
The combined entity will have sales exceeding $19 billion annually with more than 13,600 stores across 48 US states and five Canadian provinces and will have over 145,000 associates.
Under the terms of the merger agreement, Family Dollar shareholders are entitled to receive $59.60 in cash and 0.2484 of Dollar Tree common stock share for each share of Family Dollar common stock.
The company also announced that Gary Philbin, has been named president and chief operating officer of Family Dollar with immediate effect and will continue to report to Bob Sasser, CEO at Dollar Tree.
“Additionally, Howard Levine, chief executive officer of Family Dollar, has been appointed to Dollar Tree's board of directors, effective immediately,” Dollar Tree said in a press release.
The Company intends to retain and to grow both banners going forward and will optimise the combined real estate portfolio.
“The transaction enables Dollar Tree to serve a broader range of customers and deliver even greater value to them,” the retailer explained.
The complementary offerings enable Dollar Tree as well as Family Dollar to expand categories and to deliver a broader, more compelling assortment to all customers.
Dollar Tree expects to generate significant efficiencies through sourcing and procurement, format optimization, SG&A leverage, and its distribution network.
The Company anticipates that the transaction will result in an estimated $300 million of annual run-rate synergies to be fully realised by the end of the third year post-closing.
Dollar Tree will be better positioned to invest in existing and new markets and channels and to grow its store base across multiple brands.
The combined company expects to generate significant free cash flow, enabling it to pay down debt rapidly.
J.P. Morgan Securities LLC acted as exclusive financial advisor to the board of directors of Dollar Tree, and J.P. Morgan Chase Bank, N.A. committed to provide bridge financing for the transaction.
Wachtell, Lipton, Rosen & Katz and Williams Mullen acted as legal counsel to Dollar Tree in connection with the transaction.
Morgan Stanley & Co. LLC acted as exclusive financial advisor to the board of directors of Family Dollar in connection with the transaction.
Cleary Gottlieb Steen & Hamilton LLP acted as legal counsel to Family Dollar in connection with the transaction.
