Dollar Tree plans merger with national retailer
Dollar Tree, Inc., headquartered in Chesapeake, Va., the nation’s leading operator of discount variety stores, announced Nov. 7 that, as planned, it has certified substantial compliance with the request for additional information and documentary materials (second request) issued by the Federal Trade Commission on Sept. 8, 2014, regarding its proposed acquisition (proposed merger) of Family Dollar Stores, Inc.
Family Dollar, based in Charlotte, N.C., previously certified substantial compliance with the FTC on Oct. 21. In order to facilitate the FTC’s review, Dollar Tree and Family Dollar have agreed not to close the proposed merger prior to Dec. 30, unless the FTC completes its review of the proposed merger and terminates the waiting period at an earlier date.
“The FTC staff’s analysis of the proposed merger is consistent with the antitrust considerations detailed in Family Dollar’s press release on Sept. 5. The FTC staff has indicated that it is examining whether prices would increase if the parties no longer had to compete with each other, and an important factor in this examination is how prices would change under either of the merging parties’ current pricing policies. The FTC staff has also focused on the similarity and differences between the parties’ stores and other competing retail chains,” stated Randy Guiler, spokesperson for Dollar Tree in a Nov. 7 statement.
Guiler said the concerns and competitive theories articulated by the FTC staff would require divestitures in connection with the proposed merger. (Divestiture is defined by www.investopedia.com as “the partial or full disposal of a business unit through sale, exchange, closure or bankruptcy. Divestiture may result from a management decision to no longer operate a business unit because it is not part of a core competency. It may also occur if a business unit is deemed redundant after a merger or acquisition, if jettisoning a unit increases the resale value of the firm or if a court requires the sale of a business unit to improve market competition.”)
“As Dollar Tree has previously committed to divest as many stores as necessary to obtain antitrust approval, it remains confident that it will obtain antitrust approval to consummate the proposed merger reasonably promptly,” said Guiler.
“Dollar Tree is committed to cooperating with the FTC’s investigation of the proposed merger, and providing all of the necessary information for the FTC to advance its review as promptly as practicable. The special meeting of Family Dollar shareholders to vote on the proposed merger is currently scheduled for Dec. 11, and the parties will continue to provide additional information as that date approaches,” Guiler said.
“Dollar Tree is committed to working hard to complete our acquisition of Family Dollar as quickly as possible. Our amended agreement is clearly superior to Dollar General’s revised proposal based on antitrust risk, deal certainty and time value of money. Unlike Dollar General, we expect to be required to divest few, if any, stores because our business model is significantly different from Family Dollar’s model. Our product assortment and pricing is not driven by local competition, and we have very limited store overlap. As evidence of our confidence in and commitment to closing this transaction without delay, we are amending our merger agreement to provide for a commitment to divest as many stores as necessary to obtain antitrust clearance,” said Dollar Tree Chief Executive Officer Bob Sasser, in the Sept. 5 release.
Sasser said Dollar Tree and Family Dollar officials continue to have “productive discussions with the FTC.”
“Despite the second request from the FTC, we remain confident in our ability to complete our transaction with Family Dollar … and deliver expeditiously the closing certainty and substantial value that this transaction provides to both companies’ shareholders, customers and employees. We will continue to work hard to complete our acquisition of Family Dollar as quickly as possible,” said Sasser.
Locally, Family Dollar operates stores in: Presque Isle, Caribou, Fort Fairfield, Mars Hill, Houlton and Ashland, while Dollar Tree operates facilities in Presque Isle and Caribou. To date, only one has been marked for closure.
On Nov. 10, Presque Isle City Council approved a closing out sale for Family Dollar, Inc., located on Main Street behind the China Pearl. Officials offered little additional information on Family Dollar’s closure of the Presque Isle store and how the proposed merger will affect other stores in the region.
“While I am happy to address your specific store-related questions (Presque Isle), we are unable to comment on speculation regarding a proposed merger. The Presque Isle location is closing as our lease expires at this location at the end of the year. No other stores in your region are closing,” said Bryn Winburn, public and media relations manager for Family Dollar.
