The parent of Vancouver-based Dollar Tree Canada announced a major acquisition July 28: a US$8.5 billion acquisition of rival Family Dollar Stores Inc.
Virginia-based Dollar Tree Inc. (Nasdaq:DLTR) intends to keep both brands and North Carolina-based Family Dollar (NYSE:FDO) does not have any stores in Canada. So, the impact of the acquisition on Dollar Tree’s Canadian operations is expected to be minimal.
Dollar Tree expanded to Canada in 2010 when it bought Vancouver-based Dollar Giant for $62 million. Then nine years old, Dollar Giant had 86 stores. The rebranded Dollar Tree Canada now has about 200 Canadian locations and president Joseph Calvano told Business in Vancouver in April that he expected the company to have 250 locations within the year.
The combined companies will operate more than 13,000 stores across 48 states and five Canadian provinces, with annual sales exceeding $18 billion.
Dollar Tree offered the equivalent of $74.50 per share: $59.60 in cash and the rest in stock for each Family Dollar share. That was a premium of about 23 per cent over Family Dollar’s close on Friday.
Family Dollar closed the session at $75.74, up 24.86%.
Dollar Tree, meanwhile, closed at $54.87, up 1.2%.
Dollar Tree CEO Bob Sasser told media that the transaction is expected to save about $300 million through better buying power and a consolidation of distribution networks.
Dollar Tree Canada is the second largest dollar store chain in Canada after fast-growing Montreal-based Dollarama, which has about 900 stores and is expected to open between 70 and 80 stores in Canada this year.
