The deal, expected to close next quarter, marks a disappointing end to Dollar Tree's bid to establish itself as a discount store giant, with a price tag that is a sharp discount from the nearly $9 billion it paid for Family Dollar. The number of Dollar Tree stores will be roughly halved after the deal.
The company said in June it would explore options for the troubled business, including a possible sale or spinoff. Executives said its namesake chain and Family Dollar are at different stages of development and that separating them could improve the performance of each.
Dollar stores experienced an era of rapid expansion after the 2008 financial crisis as American households struggled to stretch their budgets. The stores have historically performed well in tough economic times, but in recent years they have struggled to fend off competition from chains like Walmart Inc. and Aldi Inc., which offer discounts and slash prices.
The Family Dollar chain has faced a number of problems, including a rat infestation that has led to product recalls and temporary store closures, and its sales are lagging behind Dollar Tree.
Dollar Tree is seeking to strengthen its business by closing underperforming stores and expanding its product range to include more expensive items priced up to $7.
Source: Reuters
