Dive Brief:
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The Federal Trade Commission Thursday said that in a 4 to 1 vote, the agency had approved the $9.2 billion acquisition of Family Dollar by discount retail rival Dollar Tree. The deal includes the stipulation that some 330 Family Dollar stores are sold off to preserve competition in certain markets.
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Private equity firm Sycamore Partners is all lined up to acquire those Family Dollar stores, the companies have said.
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UPDATE: The deal officially closed Monday, to create the country’s largest “dollar store” chain.
Dive Insight:
Things got ugly for a while there as Dollar General and Dollar Tree jockeyed for months in a variety of plays to take over their smaller rival. But, while Dollar General boosted its offer more than once — higher than that of Dollar Tree in fact — and resorted to a negative campaign, it was never willing to adequately address Family Dollar’s antitrust concerns.
In the end, Family Dollar went with Dollar Tree's lower offer because of its willingness to commit to divest of stores the FTC deemed anti-competitive.
Now comes the hard part. The merger will create the country’s largest dollar store chain, but the two retailers are quite different. Dollar Tree remains true to its name, with a large assortment of items at about that dollar mark, while Family Dollar sells many (often more brand-name) items at well above a dollar.
Dollar Tree operates by buying closeouts, with its often-changing merchandise something of a treasure hunt, while at Family Dollar, customers see more name brands, more stable supplies, and higher prices. Despite those higher prices, though, Family Dollar is seeing costs rise, and, despite the brand names, sales fall. All of this means there are many operational and logistical decisions ahead for the combined company.
