By Chelsey Dulaney
Dollar Tree Inc. on Friday gave an optimistic update on its
pending $8.5 billion acquisition of Family Dollar Stores Inc.,
saying it will have to divest itself of a "relatively small" number
of stores to secure U.S. antitrust approval of the deal, which
could close as early as February.
Dollar Tree said it would work with the Federal Trade Commission
over the next few weeks to determine what divestitures will be
required, but said it would likely be a small number that won't be
material to its plans for the combined company.
Dollar Tree has said it would be willing to shed as many stores
as possible--or sensible--to get its deal done, and the companies
amended their merger agreement to reflect that commitment.
Initially expected to close in November, the deal is aimed at
consolidating the market for serving low-income shoppers and
building a stronger competitor to the likes of Wal-Mart Stores
Inc.
Meanwhile, larger rival Dollar General Corp. also is in talks
with the FTC about a potential acquisition of Family Dollar. Its
$9.1 billion unsolicited bid was shot down in September by Family
Dollar, which claimed the antitrust risks were too high.
Dollar General has said it would be willing to divest itself of
up to 1,500 stores, but Family Dollar's chief executive, Howard
Levine, has said there is a "very real and material risk" that
Dollar General's offer would fail to pass a lengthy regulatory
process.
At the heart of the FTC's review are the similarities among the
discount retailers' businesses and how a combination could impact
competition and pricing. Dollar General and Family Dollar both sell
a variety of consumable and household products at a range of
prices, while Dollar Tree primarily sells goods for $1 or less.
Dollar Tree on Friday touted the regulatory uncertainty over
Dollar General's bid, saying the FTC may require divestitures "far
in excess" of the 1,500 stores Dollar General has said it would
shed.
A representative for Dollar General couldn't immediately be
reached for comment.
Family Dollar shareholders are scheduled to vote on the Dollar
Tree deal at a Dec. 23 meeting.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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