Dollar Tree is getting a new kind of bang for its buck. The company is buying rival discount retailer Family Dollar for $8.5 billion.
The boards of both companies unanimously approved the merger. The transaction valued at $74.50 a share, is a nearly 23% premium over Family Dollar’s closing price on Friday. Charlotte, North Carolina based Family Dollar’s shareholders will receive $59.60 in cash and $14.90 in Dollar Tree shares.
The multi billion dollar deal means more than 13,000 stores and more consumers in the United States and Canada for the discounter. Dollar General Corp., is the leading discount store with more than 11,300 stores across the country.
Just like many major retailers, dollar stores have had their share of problems, including sale shortages due to the recession. Family Dollar tried coping by shutting down over 300 stores, and slashing prices in April, but last month, investor Carl Icahn urged the company to put itself up for sale.
While both companies have different business models, it is unclear if any Dollar Tree or Family Dollar stores will be closed or if any jobs will be lost. However, Dollar Tree will continue to operate under the existing Dollar Tree brands it offers as well as the Family Dollar brand.