JCPenney, WalMArt and Dollar Tree Make Job Cuts to Corporate/Non-Store Positions

Walmart recently announced cuts of 450 positions at its headquarters. Dollar Tree announced the elimination of 370 positions (115 of those unfilled currently) at its headquarters. JC Penney followed suit, announcing plans to cut 300 of its 3,400 home office positions. All are stating cuts are to reduce expenses.

JC Penney still plans to hire 30,000 seasonal workers at the store level. In a statement the company said JC Penney is working to achieve its financial growth targets, and it is essential that operations align with the strategic priorities of the company. Over the last several months, the company has been evaluating its home office structure to identify opportunities for greater simplification and higher productivity.

Walmart’s announcement indicated the job cuts are coming at a time when Walmart is investing billions into its e-commerce to better compete with Amazon. “Our customers are changing, retail is changing and we must change. We need to become a more agile company that can easily adapt to shifting customer demand,” CEO Doug McMillon told about 18,600 employees at its headquarters.

Sources: Chain Store Age and Fortune

Family Dollar Shareholders Approve Dollar Tree Deal

January 22, 2015

After months of delay and a failed bid by Dollar General, Family Dololar shareholders agreed to be acquired by Dollar Tree in a deal that creates a combined company with more than 14,000 locations, estimated annual sales of $19 billion and compelling growth opportunities.

Approval of the deal creates a new competitive dynamic in the world of extreme value retailing with the combination of Dollar Tree and Family Dollar making for a more formidable competitor to Dollar General and its nearly 12,000 stores.

Family Dollar operated 8,101 stores, which averaged about 7,200 square feet and were supported by 11 distribution centers at the end of the company's first quarter on November 29, 2014.  More than three-fourths of the company's sales are derived from food and consumable categories.  By comparison, Dollar Tree operated 5,077 stores, including 205 locations in Canada, which averaged about 9,000 square feet and were supported by 10 distribution centers at the end of the company's third quarter on November 1, 2014.  About half of Dollar Tree's sales come from food and consumable categories and the company also operates a format called "Deal$," where it sells merchandise for more than $1.

The deal is expected to close in March.  About 74% of the shares were voted in favor of the deal.

"Today's vote of approval by Family Dollar shareholders represents a crucial step toward combining Dollar Tree, North America's leading fixed price point discount retailer, with Family Dollar, a leading multi-price point retailer with a 50 plus year history of serving low and middle income customers," said Bob Sasser, Dollar Tree's CEO.  "By adding Family Dollar to our portfolio of brands, Dollar Tree will soon operate more than 13,000 stores in 48 states and five Canadian provinces with annual sales exceeding $18 billion.  This merger enhances our geographic footprint and diversifies our business model.  We intend to operate and grow both banners."

Family Dollar chairman and CEO Howard Levine said he was pleased with the outcome of the vote.

"The Family Dollar Board of Directors and management team have worked diligently to advance the best interests of all of the company's stockholders, and we are grateful for the support we received for the merger proposal," Levine said.  "We are also very appreciative of Family Dollar's talented and committed team members, who have remained focused on serving our customers throughout this process.  We look forward to completing the transaction with Dollar Tree and remain excited about the opportunity that this combination will create for our stockholders, team members, customers and other stakeholders."

Dollar General emerged as a bidder for Family Dollar after Family Dollar and Dollar Tree announced their acquisition deal on July 27, 2014.  Dollar General's all-cash offer for $80 a share appeared superior on the surface to Dollar Tree's cash and stock offer valued at $76.85 a share, but concerns quickly emerged about the number of store divestitures that would be required to secure regulatory approval because of the extensive overlap between the Dollar General and Family Dollar footprint.  Family Dollar indicated that between 3,500 and 4,000 stores were "problematic" based on Federal Trade Commission feedback while Dollar General indicated regulatory approval could be secured with the divestiture of no more than 1,500 stores.

In the end, Family Dollar shareholders voted for the certainty of the tie-up with Dollar Tree over the richer but potentially problematic offer from Dollar General.

Source: Retailing Today 

Feuding Continues In The Family Dollar Affair

December 5, 2014

As the acquisition of Family Dollar Moves closer to resolution, would-be acquirers Dollar Tree and Dollar General maintain widely differing views on the superiority of their respective offers and the opinion of federal regulators.

The latest developments in the ongoing Family Dollar affair occurred December 5 when Dollar Tree and Dollar General took shots at each other in sharply worded press releases that offered differing views on competition, competitive overlap and store divestiture scenarios.  Both companies said they have been actively involved in conversations with the Federal Trade Commission as a December 23 vote on the deal with Dollar Tree looms for Family Dollar shareholders.

"We believe that the FTC staff appreciates that Dollar Tree and Family Dollar are different retailers with complementary business models," according to a statement by Dollar Tree indicating a small number of stores would need to be divested to secure regulatory approval.  Conversely, Dollar Tree contends the FTC may require Dollar General to divest far in excess of the 1,500 stores Dollar General offered to divest in its tender offer for Family Dollar.

"Dollar Tree stores sell everything for $1 or less.  Our product mix is constantly changing and includes a balance of things the consumer needs and things the consumer wants such as seasonal items, party goods, and other discretionary products," Dollar Tree said in a statement.  "Our shopping experience is fun, fast, and friendly with surprising products engendering a thrill of the hunt atmosphere.  Family Dollar sells primarily branded consumable products at multiple price points up to $20 or more.  Their customers expect Family Dollar to carry the same assortment of products week in and week out."

Based on the view that Dollar Tree and Family Dollar are distinct competitors and therefore only a small number of divestures would be required, according to Dollar Tree, which said it would be in a position to complete the deal by February 2015.

Not so fast was the response from Dollar General shortly after Dollar Tree issued its statement.  Dollar General looks past its similarities with the Family Dollar business model to assert its chief rival is Walmart.

"Dollar General's documents and data tell a very different story from that contained in the press release issued today by Dollar Tree," the company said.  "Walmart, not Family Dollar, is the primary driver regarding Dollar General's strategic pricing decisions, and more than 90% of Dollar General's SKUs are nationally priced.  Dollar General is confident that its approach to strategic and pricing decisions is both correct and superior to that of Family Dollar and Dollar General has no intention of adopting a flawed strategy - either now or after an acquisition of Family Dollar - that it believes would impair its ability to compete with Walmart and lead to inferior financial performance."

The coming weeks promise even more drama in the merger saga.  Dollar General said it will continue to work with the FTC and expects to provide an update in sufficient time to allow Family Dollar shareholders to review information prior to the meeting scheduled for December 23.

Meanwhile, Dollar Tree continues to portray its rival's offer as a risky and uncertain proposal due to overlap issues.  As a result, Dollar General may spend many months advocating and negotiating with the FTC with significant uncertainty as to the outcome and its bid may ultimately fail because the scope of an unprecedented FTC-required divestiture would lead to an unacceptable loss of value, according to Dollar Tree.

Source: Retailing Today 

Dollar Tree Q3 Sales Lift Holiday Outlook

November 20, 2014

As Dollar Tree moves forward with its acquisition of Family Dollar, the company reported an increase in same-store sales and expressed a favorable holiday outlook.

Dollar Tree's earnings per share increased 19% to $0.69 and its revenue increased 11.2% to $2.1 billion compared to the third quarter of fiscal 2013; these results were driven by comparable store sales increasing 5.9% during the quarter compared to an increase of 3.1% in the prior-year period.

"These results validate our value enhancement initiatives targeted to attract new, and retain current, customers.  Our store teams are well-prepared and our shelves are well-stocked with incredible values for the upcoming holiday season," said Bob Sasser, Dollar Tree CEO.

Dollar Tree opened 117 net new stores during the quarter, bringing its total store count to 5,282.  The company has opened 291 net new stores year-to-date, putting it on pace to reach its goal of opening 375 net new stores in fiscal 2014.

Dollar Tree has agreed to buy Family Dollar Inc. but the deal is facing a challenge from Dollar General Corporation over antitrust concerns.

Dollar Tree, which like other discounters is facing competition from small-format stores opened by big retailers such as Walmart, will become the largest dollar store chain if it pulls off its deal with Family Dollar.

In its outlook statement, Dollar Tree estimated fourth-quarter sales in the range of $2.39 billion to $2.46 billion and EPS in the range of $1.07 to $1.14.  Consensus estimates call for EPS of $1.13 on revenues of $2.45 billion.

Source: Retailing Today

Voting Extended In Family Dollar Deal

October 31, 2014

Dollar General has extended the deadline for Family Dollar shareholders to approve a buyout while it continues to recommend a "no" vote on a competing proposal from Dollar Tree.

Dollar General said it extended its tender offer to acquire all outstanding shares of Family Dollar for $80.00 to December 31 from October 31.  Meanwhile, Family Dollar is scheduled to hold a special meeting on December 11 to vote on a merger with Dollar Tree that offers less generous compensation than Dollar General's bid, but is viewed as offering shareholders a higher degree of certainty concerning regulatory approval.  Dollar General has disputed that assertion and both it and Family Dollar have presented their respective experts to offer opinions on the merits of a Dollar General versus Dollar Tree acquisition.

Dollar General wants Family Dollar shareholders to vote against the Dollar Tree merger to send a clear message to the Family Dollar board to engage in discussions with Dollar General.  The company said a vote against the merger agreement with Dollar Tree would not obligate Family Dollar shareholders to tender their shares in the Dollar General tender offer.

Dollar General said it remains committed to the proposed acquisition of Family Dollar and will continue to cooperate with the Federal Trade Commission to obtain antitrust regulatory clearance for the transaction.

Source: Retailing Today

Family Dollar Closing In On FTC Compliance

October 22, 2014

Family Dollar Stores on Tuesday announced that it has certified substantial compliance with both the Federal Trade Commission's second request regarding the acquisition by Dollar Tree, as well as the second request regarding Dollar General's bid for the company.

Dollar Tree is expected to certify substantial compliance by November 7, the company stated, however Family Dollar has no insight as to when Dollar General will comply with the FTC's second request.  Family Dollar continues to believe, based on its discussions with the FTC staff, that the FTC review of the Dollar General tender offer will continue well into 2015, the company stated.

Once all parties have certified that they have substantially complied with FTC's second request, the Commission has 30 additional days to complete its review of the transaction and to take action if necessary.

Family Dollar is committed to cooperating with the FTC's investigations of both transactions, and providing all of the necessary information from Family Dollar for the FTC to advance its review of both potential transactions as promplty as practicable.

Source: Retailing Today

Dollar General Appeals Directly To Rival's Shareholders

September 10, 2014

Since Family Dollar's board of directors unanimously rejected Dollar General's second and sweetened tender offer from September 2, Dollar General has decided to make the tender offer directly to the company's shareholders.

The company's all-cash offer of $80 per share beats Dollar Tree's offer of $74.50 per share cash/stock offer originally made July 28.  The Family Dollar board has rejected both Dollar General's offers on the basis of antitrust regulatory considerations.

But Dollar General is appealing to Family Dollar's shareholders with approximately $640 million of additional aggregate value over Dollar Tree's offer - a premium of 31.9% over the closing price of $60.66 for Family Dollar stock on the day prior to the Dollar Tree announcement.

As part of a definitive merger agreement with Family Dollar, Dollar General would be willing to agree to divest up to 1,500 stores if required by the FTC and to pay Family Dollar a $500 million reverse breakup fee if the transaction does not close for reasons related to antitrust approvals.

The offer is not conditioned upon any financing arrangements, according to Dollar General, which added that it has received written financing commitments that are in full force and effect from Goldman, Sachs & Co. and Citigroup Global Markets for all the financing necessary to consummate the proposed all-cash transaction.

"Our offer provides Family Dollar shareholders with significantly greater value than the existing agreement with Dollar Tree, as well as immediate and certain liquidity for their shares," said Rick Dreiling, chairman and CEO of Dollar General.  "By taking this step, we are providing all Family Dollar shareholders a voice in this process, and we urge them to tender into our offer.  Additionally, we now can begin the antitrust review process and will have an opportunity to present our position directly to the FTC.  As we previously have stated, we are confident in the results of our antitrust analysis, and we look forward to a constructive dialogue with the FTC."

Meanwhile, the Family Dollar board has confirmed that it will review and consider Dollar General's latest move in accordance with applicable law, and advise shareholders of its position regarding the tender offer by making available to shareholders, and filing with the Securities and Exchange Commission, a solicitation/recommendation statement on Schedule 14D-9.

"Applicable securities laws prevent Family Dollar from making any further comments on Dollar General's tender offer or its terms until after this filing is made on Schedule 14D-9 which will be no later than September 23, 2014.  Until that time, Family Dollar shareholders are advised to take no action," the board said in a statement, adding only that it has not changed its recommendation in support of the merger with Dollar Tree."

Source: Retailing Today 

Dollar Tree To Divest As Many Stores As Required For Antitrust Approval

September 5, 2014

Dollar Tree and Family Dollar have amended their merger agreement to include a commitment by Dollar Tree to divest as many stores as necessary or advisable to obtain antitrust clearance for the previously announced cash and stock transaction.

All other terms and conditions of the merger agreement remain the same as announced on July 28, 2014.  The two companies also said that their expectations for a closing date for the transaction have accelerated to as early as the end of November 2014.

News of the amended merger agreement coincided with Family Dollar's rejection of Dollar General's revised proposal made on September 2 on the basis of antitrust regulatory considerations.

Dollar Tree and Family Dollar expect the Federal Trade Commission to issue a second request for additional information on September 8, and said they are confident that regulatory approval will be obtained.

"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," said Bob Sasser, Dollar Tree's CEO.  "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."

Under the terms of the agreement announced on July 28, Family Dollar shareholders will receive $59.60 in cash and $14.90 equivalent in Dollar Tree shares for each common share of Family Dollar owned, subject to a collar.  At closing, Family Dollar shareholders would own no less than 12.7% and no more than 15.1% of the outstanding common stock of Dollar Tree.

"Dollar Tree and Family Dollar continue to have productive discussions with the FTC," added Sasser, "and despite the anticipated second request from the FTC, we remain confident in our ability to complete our transaction with Family Dollar by as early as the end of November 2014 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."

Source: Retailing Today 

Family Dollar Rejects Dollar General Merger Proposal

September 5, 2014

Family Dollar has rejected the revised proposal made by Dollar General on September 2 on the basis of antitrust regulatory considerations.  The Dollar General offer may be financially superior, the dollar store noted, but it's not likely to pass muster with the Federal Trade Commission.

"Our board of directors, with the assistance of outside advisors and consultants, reviewed all aspects of Dollar General's revised proposal and unanimously concluded that it is not reasonably likely to be completed on the terms proposed," stated Howard Levine, chairman and CEO of Family Dollar.  "There is a very real and material risk that the transaction proposed by Dollar General would fail to close, after a lengthy and disruptive review process.  Accordingly, our board has rejected Dollar General's revised proposal and reaffirmed its support of the transaction with Dollar Tree, which delivers attractive value in the form of immediate upfront cash and upside participation in a combined Dollar Tree - Family Dollar entity, as well as closing certainty."

"We are focused on delivering to Family Dollar shareholders the highest value with certainty, and the Dollar Tree transaction does just that.  Dollar Tree has taken the antitrust risk off the table by committing to divest as many stores as necessary to obtain antitrust clearance.  We remain fully committed to the Dollar Tree transaction," added Ed Garen, a Family Dollar director and co-founder and chief investment officer at Trian Fund Management.  "Dollar General's revised proposal, on the other hand, does not eliminate regulatory risk for Family Dollar shareholders.  Dollar General has repeatedly stated that antitrust is not a risk, yet they have put forth proposals that require Family Dollar shareholders to bear the ultimate risk.  Receiving a reverse breakup fee with an after-tax value of less than $3 a share does virtually nothing to compensate the Family Dollar shareholders for assuming that risk."

Family Dollar's merger agreement with Dollar Tree contains a customary provision that permits Family Dollar to enter into discussions and share information with any competing bidder, but only if the board is able to determine that failure to do so would be inconsistent with its fiduciary duties and that the unsolicited, written proposal from the competing bidder would be reasonably expected to lead to a proposal that is not only financially superior, but also "reasonably likely to be completed on the terms proposed."

Family Dollar contends that the FTC would take a more critical review of any proposed Dollar General/Family Dollar merger.

The Family Dollar Board's unanimous determination to reject Dollar General's revised proposal and to accept Dollar Tree's commitment to divest as many stores as required for antitrust approval follows the unanimous recommendation of a committee of four non-management independent directors that has been overseeing the company's consideration and exploration of strategic alternatives since January 2014.  This committee consists of Glenn Eisenberg, Ed Garden, George Mahoney, Jr. and Harvey Morgan.

Source: Retailing Today 

An Offer Family Dollar Can't Refuse

September 2, 2014

The Family Dollar board is under new pressure to walk away from a deal with Dollar Tree after Dollar General further increased an already more generous counter offer.

Early Monday Dollar General increased its all cash offer to $80 a share from $78.50 a share and increased the number of stores it said it would be willing to divest to 1,500 from 700.  The company also said it would be willing to pay Family Dollar a $500 million reverse break-up if the deal failed to secure antitrust clearance.

Family Dollar already has an acquisition in place with Dollar Tree for $74.50 a share, consisting of $59.60 in cash and $14.90 in Dollar Tree shares.  While Dollar General's initial proposal was richer and all cash, concerns surfaced that regulqtory approval could be an issue even though Dollar General indicated it would divest up to 700 locations.

"We are confident that our enhanced proposal sufficiently addresses any concerns that led Family Dollar's board of directors to reject our prior proposal without any discussions between our companies," said Rick Dreiling, Dollar General's chairman and CEO.  "Even as a secondary antitrust review supported our previous proposal, we revised our offer to demonstrate the seriousness of our commitment.  Our revised proposal provides Family Dollar shareholders with significantly increased value over the existing agreement with Dollar Tree, as well as immediate and certain liquidity for their shares.  If the Family Dollar board fails to seize this opportunity to maximize value for its shareholders, we will consider taking our superior proposal directly to the Family Dollar shareholders."

Dollar General believed its earlier 700 store divestiture commitment would have been sufficient to clear any review by the Federal Trade Commission and suggested those analyzing the deal on behalf of Family Dollar are using a flawed methodology.

"Perhaps Family Dollar's advisors are analyzing this transaction as if it were a potential grocery store merger or utilizing data that tells a story much different than Dollar General's documents and data," according to a Dollar General statement.  "Dollar General is confident that this matter would not be evaluated as traditional grocery store merger and that, as the acquirer, Dollar General's documents and data would be more important to the FTC in its analysis than those of Family Dollar."

Those documents indicate that Dollar General is more concerned about competition from Walmart than Family Dollar and it makes pricing decisions accordingly.

In a letter to the Family Dollar board, Dreiling expressed disappointment that the Dollar General's earlier bid was rejected without any conversations but said the company was committed to the deal.  The company took the added measure of engaging Richard Feinstein of Boies, Schiller & Flexner to independently review the company's earlier antitrust analysis.  Feinstein led the FTCS Bureau of Competition until 2013 and determined the deal can be completed on the company's initial terms.

"We look forward to the time when our companies and their advisors are able to disucss these matters more openly with one another once you have taken the appropriate steps under your existing merger agreement to allow that to happen," Dreiling said.  "Only by engaging with us can you ensure that you have fulfilled your duty to your shareholders to be well-informed and that you have acted in the best interests of your shareholders to maximize the value of their shares."

Source: Retailing Today 

Despite 2.6% Profit Decline, Dollar Tree Delivers In Second Quarter

August 21, 2014

Dollar Tree delivered its 26th consecutive quarter of positive comparable store sales growth in the second quarter, but profit declined 2.6% thanks to increased freight costs and investments in higher-value products.

Consolidated comparable store sales increased 4.5% on a constant currency basis.  Adjusted for the impact of Canadian currency fluctuations, the comparable store sales increase was 4.4%.  Consolidated net sales increased 9.5% to $2.03 billion from $1.85 billion in the prior year's second quarter.

Gross profit in the quarter increased 7% to $694.1 million from $648.7 million in the prior year's second quarter.

Net income, compared to the prior year's second quarter, including acquisition-related costs, decreased approximately $3.2 million to $121.5 million, and diluted earnings per share increased by 5.4% to $0.59.  Excluding acquisition-related costs, net income increased approximately $1.4 million to $126.1 million and diluted earnings per share increased 8.9% to $0.61.

"I am very pleased with our second quarter results," CEO Bob Sasser said.  "Expanded assortments of high-value product contributed to our strongest quarterly comparable store sales performance in two years.  Pet supplies, hardware, household products, food, electronics and party goods all performed well in the quarter.  Our 4.5% comp sales resulted from increases in both customer traffic and average ticket.  I am paticularly proud of our store associates.  Our store teams continue to execute at a high level as the company delivered its 26th consecutive quarter of positive comparable store sales growth.  In challenging macro environments, consumers are increasingly relying on Dollar Tree to be part of the solution in managing their family's budget.  Our stores are well-stocked with incredible values and we are prepared for the fall selling season."

The company opened 90 stores, expanded or relocated 20 stores and closed 4 stores during the quarter.  Retail selling square footage increased to 44.8 million sq. ft., a 6.8% increase compared to the prior year.

Looking ahead, the company estimates sales for the third quarter to range from $2.02 billion to $2.07 billion, based on low to mid-single digit positive comparable store sales.  Diluted earnings per share are estimated to range from $0.61 to $0.66, excluding acquisition-related costs.

Full-year 2014 sales are now estimated to range from $8.44 billion to $8.55 billion.  This estimate is based on a range of low to mid-single digit positive comparable store sales.  Diluted earnings per share, which includes $0.02 per share of second quarter acquisition-related costs, are expected to range from $2.94 to $3.06, excluding third and fourth quarter acquisition-related costs.

Dollar General bid $78.50 for Family Dollar Monday morning in a $9.7 billion deal that exceeds the $74.50 a share Dollar Tree offered for Family Dollar on July 28.  The deal would create a small format powerhouse with nearly 20,000 stores in 46 states and sales of more than $28 billion.  In a statement released this morning, Family Dollar's board of directors has unanimously rejected the non-binding proposal made by Dollar General on the basis of antitrust regulatory considerations.  The Family Dollar board also unanimously reaffirmed its recommendation in support of the merger agreement with Dollar Tree.

Source: Retailing Today 

Family Dollar Rejects Dollar General's Takeover Bid

August 21, 2014

Family Dollar Stores rejected a $9 billion, all-cash takeover offer from Dollar General, pointing to antitrust concerns and reaffirming its support for its deal with smaller rival Dollar Tree.

Family Dollar's agreement with Dollar Tree, reached late last month, is worth about $8.5 billion in cash and stock, or $74.50 a share.  Family Dollar shares fell slightly to $79.65 in recent remarket trading, still above Dollar General's offer of $78.50, indicating investors expect the fight to drag on.

"Our board reviewed, with our advisers, all aspects of Dollar General's proposal and unanimously concluded that it is not reasonably likely to be completed on the terms proposed," Chairman and Chief Executive Howard R. Levine said.  "Accordingly, our board rejects Dollar General's proposal and reaffirms its support for the pending merger with Dollar Tree."

A representative from Dollar General wasn't immediately available, while Dollar Tree declined to comment.

The battle over Family Dollar, the second-largest U.S. dollar chain, has come as so-called dollar stores have performed with relative strength compared to the rest of the retail sector, which has been consolidating as customer traffic declines and online competition grows.

Dollar General, the largest of the three dollar stores, had said it would divest 700 stores after a potential merger with Family Dollar to satisfy regulatory concerns.  A combination of Dollar General and Family Dollar would have about 20,000 stores in 46 states, with sales of more than $28 billion, Dollar General has said.

Dollar Tree is No. 3 in the market.

Investor Nelson Peltz's Train Fund Management LP also cited antitrust worries while it offered support for Family Dollar's deal with Dollar Tree.

"Given the significant antitrust issues involved with Dollar General's proposal, we will not jeopardize the Dollar Tree deal for a transaction with Dollar General that has a high likelihood of not closing due to antitrust considerations," Train co-founder and partner Ed Garden said in Family Dollar's release Thursday.  "We remain fully committed to the Dollar Tree transaction."

Combined, Train and Mr. Levine own 16% of Family Dollar's shares.  Train itself had attempted to buy Family Dollar with a $7.75 billion offer the retailer rejected in 2011.  The firm has had a representative on the retailer's board since 2001.

Source: The Wall Street Journal 

Dollar General Outbids Dollar Tree For Family Dollar

August 18, 2014

Dollar General bid $78.50 for Family Dollar this morning in a $9.7 billion deal that exceeds the $74.50 a share Dollar Tree offered for Family Dollar on July 28.

The deal would create a small format powerhouse with nearly 20,000 stores in 46 states and sales of more than $28 billion.

"For Family Dollar shareholders, our proposal is financially superior to the current transaction agreement with Dollar Tree and would provide Family Dollar shareholders with a substantial premium and immediate liquidity for their shares," said Rick Dreiling, Dollar General's chairman and CEO.  "We look forward to expeditiously entering into constructive discussions with Family Dollar in order to sign a definitive merger agreement that provides enhanced value to Family Dollar shareholders and enables Dollar General to realize the benefits of this combination."

The $78.50 per share Dollar General offers represents a 29.4% premium over the $60.66 closing price of Family Dollar shares the day before Dollar Tree made its offer.  The deal Dollar Tree offered Family Dollar is valued at about $8.5 billion and involves Family Dollar shareholders receiving $59.60 in cash and $14.90 in equivalent Dollar Tree shares.  The offer has already been unanimously approved by the boards of both companies.

To get the deal done, Dollar General said it had done significant economic and antitrust analysis and was prepared to commit to divesting as many as 700 stores.  The company also committed to paying the $305 million termination fee Family Dollar will owe Dollar Tree if the previously announced deal falls through.  In addition, Dollar General CEO Dreiling said he would remain in his current role to oversee integration of the companies after previously indicating he would retire in 2015.

Dollar General and Family Dollar operate complementary business - similar size stores with similar product assortments - which is expected to result in operational synergies and annual savings of between $550 and $600 million three years after the proposed merger is complete, according to Dollar General.

"Dollar General has developed extensive integration plans across work streams.  The expected synergies would be derived from sales growth driven by an improved merchandise offering and store presentation, purchasing and sourcing efficiencies, distribution and transportation optimization and administrative savings," according to the company.

Source: Retailing Today 

Dollar Tree To Acquire Family Dollar

July 28, 2014

Dollar Tree said it would acquire Family Dollar in a transformational cash and stock deal valued at $8.5 billion to create a company with more than 13,000 stores and annual sales of $18 billion.

The deal was unanimously approved by the boards of both companys and involves Dollar Tree paying Family Dollar shareholders $59.60 in cash and $14.90 in equivalent Dollar Tree shares.

"We will continue to operate under the Dollar Tree, Deals, and Dollar Tree Canada brands, and when this transaction is complete, we will operate under the Family Dollar brand as well," said Dollar Tree CEO Bob Sasser.  "Throughout our history, we have strived continuously to evolve and improve our business.  This acquisition, which enhances our footprint and diversifies our company, will enable us to build on that progression, and importantly, positions Dollar Tree for accelerated growth.  By offering both fixed-price and multi-price point formats and an even broader, more compelling merchandise assortment, we will be able to provide even greater value and choice to a wider array of customers."

Sasser said the deal would extend the company's reach to lower-income customers and strengthen and diversify its store footprint while also delivering significant synergies by leveraging best practices of the organizations.  Dollar Tree anticipates that the transaction will result in $300 million of annual run-rate synergies to be fully realized by the end of the third year after closing.

Plans call for Family Dollar CEO Howard Levine to remain with the combined company, reporting to Sasser, and serve as a member of the board.

"For more than 54 years, Family Dollar has provided value and convenience to customers.  Dollar Tree also has a rich history of providing great value to customers, and together, as one company, we can provide more customers with even greater value and convenience," Levine said.

The deal is a culmination of a process that began last winter and included discussions of potential combinations with other partners, Levine said.  The comprehensive review process ultimately determined the combination with Dollar Tree was in the best interest of shareholders.

"This combination will enable Family Dollar to accelerate efforts to improve the business and will benefit our dedicated team members who will now be part of a larger, more diverse organization," Levine said.  "I am excited about our future with Dollar Tree, and I look forward to working with the Dollar Tree team to complete the combination as quickly as possible to realize the compelling benefits for all our stakeholders."

Source: Retailing Today

Record First Quarter For Dollar Tree

May 22, 2014

Increases in traffic and average ticket resulted in record first quarter sales growth at Dollar Tree.

Consolidated net sales for the quarter were a record $2 billion, a 7.2% increase compared to $1.87 billion reported for last year's first quarter.  Consolidated comparable store sales increased 2% on a constant currency basis.  Adjusted for the impact of Canadian currency fluctuations, the comparable-store sales increase was 1.9%.

Earnings per diluted share for the first quarter were $0.67, a 13.6% increase compared to earnings per diluted share of $0.59 reported for last year's quarter.

Discretionary business grew slightly faster than consumables and leading categories for the quarter included candy, check-out products, stationery and seasonal merchandise for Valentine's Day and Easter.

"Our stores are currently filled with a balanced mix of consumable products and exciting variety merchandise for Summer Fun.  Inventory is clean and fresh and our associates are focused on providing a great shopping experience for every customer, at every store, every day," said CEO Bob Sasser.

The company continues to expand.  During the first quarter, Dollar Tree opened 94 stores, closed six stores and expanded or relocated 28 stores.  Retail selling square footage increased 6.8% compared to a year ago, to 44.0 million sq. ft.

Looking ahead, the company estimates sales for the second quarter to be in the range of $1.97 billion to $2.02 billion, based on low-single digit positive comparable-store sales.  Diluted earnings per share are estimated to be in the range of $0.58 to $0.64.

Full year sales are now estimated to be in the range of $8.37 billion to $8.54 billion.  This estimate is likewise based on a range of low-single digit positive comparable-store sales.  Fiscal year 2014 diluted earnings per share are expected to be $2.94 to $3.12.  These estimates assume no impact from potential additional share repurchase activity in 2014.

Dollar Tree operated 5,080 stores in 48 states and five Canadian Provinces as of May 3.

Source: Retailing Today