By Lisa Beilfuss
Dollar Tree Inc. said the Federal Trade Commission has
substantially completed its review of the retailer's planned
acquisition of Family Dollar Stores Inc. and has identified about
340 stores for divestiture.
The company had indicated in February that it expected the
agency to require the divestiture of no more than roughly 300
stores, though it warned at that time the FTC was reviewing more
than 500 locations.
The low number of potential divestitures was a key factor in the
decision of Family Dollar shareholders earlier this year to vote
for Dollar Tree's takeover bid instead of a higher offer from
market leader Dollar General Corp.
Dollar Tree said Tuesday that it expects all or almost all of
the stores to be divested to be Family Dollar locations. The shops
represent about $47.4 million of operating income, according to the
Dollar Tree.
Dollar Tree said it continues to make progress with potential
buyers for the locations and has received multiple indications of
interest. Each of the potential suitors intends to operate these
divested locations as dollar stores to address the FTC's concerns,
it added.
Dollar Tree intends to close the merger in May but said the
timing is subject to certain factors beyond its control, including
FTC approval.
Family Dollar shareholders overwhelmingly approved a deal in
January to be sold to Dollar Tree, choosing regulatory certainty
over a riskier--but higher--offer from Dollar General, which had
long eyed buying up its main competitor.
Those plans were derailed when Dollar Tree swooped in last
summer with a cash and stock takeover proposal. Dollar General came
in three weeks later with a higher all-cash offer, but it failed to
satisfy concerns on Family Dollar's board that combining the
biggest two dollar store chains would face significant antitrust
hurdles.
Shares in Dollar Tree rose about 1% to $81.30 in after-hours
trading, while shares in Family Dollar were unchanged.
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