Dollar Tree Completes Acquisition of Family Dollar
July 06 2015 - 12:38PM
Business Wire
- Creates combined organization with
sales exceeding $19 billion annually with more than 13,600 stores
across 48 states and five Canadian provinces
- Gary Philbin named President and
Chief Operating Officer of Family Dollar Stores
Dollar Tree, Inc. (NASDAQ: DLTR), North America’s leading
operator of discount variety stores selling everything for $1 or
less, announced today that it has completed the acquisition of
Family Dollar Stores, Inc., a leading national discount retailer
offering name brands and quality, private brand merchandise.
“We are pleased to announce we have completed our acquisition of
Family Dollar and we formally welcome the Family Dollar team to the
Dollar Tree organization,” stated Bob Sasser, Chief Executive
Officer. “This is a transformational opportunity for our business
to offer broader, more compelling merchandise assortments, with
greater values, to a wider array of customers. This acquisition
will extend our reach to low-income customers, while strengthening
and diversifying our footprint. We plan to leverage best practices
across both organizations to deliver significant cost synergies.
Combined, our growth potential is enhanced with improved
opportunities to increase store productivity and to open more
stores across multiple banners.”
Under the terms of the merger agreement first announced and
unanimously approved by each company’s Board of Directors in July
2014, Family Dollar shareholders are entitled to receive $59.60 in
cash and 0.2484 of a share of Dollar Tree common stock for each
share of Family Dollar common stock.
The Company also announced that Gary Philbin, age 58, has been
named President and Chief Operating Officer of Family Dollar,
effective immediately. In his new role, Mr. Philbin will continue
to report to Bob Sasser. Mr. Philbin joined Dollar Tree as Senior
Vice President of Stores in December 2001, and was later promoted
to Chief Operating Officer in March 2007 and to President in June
2013. Prior to joining Dollar Tree, Mr. Philbin held senior-level
positions in both merchandising and operations during his thirty
years in the retail grocery industry.
“I am very proud to announce that Gary will be taking on his new
leadership role of Family Dollar Stores,” Sasser said. “Gary has
played an integral role in the success of Dollar Tree over the past
fourteen years. Notably, Gary was instrumental in improving the
Dollar Tree customer shopping experience and the related customer
satisfaction, as well as leading the integration following our
Canadian acquisition in 2010.”
Philbin stated, “I am very pleased to have the opportunity to
lead the Family Dollar team. Throughout the due diligence and
integration planning processes, I have been impressed with the
experience, talent and dedication of the Family Dollar team
members. Our focus as an organization will be on the customer - by
consistently providing great values, affordable prices, and
relevant items in a store environment that is convenient, clean,
reliable and efficient. We are well-prepared for the integration
process, which is now under way.”
Additionally, the Company announced that Howard R. Levine, Chief
Executive Officer of Family Dollar, has been appointed to Dollar
Tree’s board of directors, effective immediately.
Sasser concluded, “We appreciate the efforts, dedication and
teamwork displayed by both Dollar Tree and Family Dollar associates
throughout our integration planning processes. We are well-prepared
to integrate our two companies.”
Strategic Rationale
- Creates a leading discount retailer
in North America. The combined organization will operate more
than 13,000 stores in 48 states and five Canadian provinces, with
sales exceeding $19 billion annually and over 145,000
associates.
- Complementary business model across
fixed- and multi-price point. Dollar Tree is the nation’s
leading operator of fixed-price point stores, selling everything
for $1 or less, and Family Dollar is a leading national operator of
multi-price point stores providing value-conscious consumers with a
selection of competitively priced merchandise in convenient
neighborhood stores. The Company intends to retain and to grow both
banners going forward and will optimize the combined real estate
portfolio.
- Targets broader range of customers
and geographies. Dollar Tree targets customers within a broad
range of Middle America with stores located primarily in suburban
areas and Family Dollar targets low- and lower-middle income
households through its urban and rural locations. The transaction
enables Dollar Tree to serve a broader range of customers and
deliver even greater value to them.
- Leverages complementary merchandise
expertise. Dollar Tree’s merchandise mix consists of a balance
between consumable merchandise and variety/seasonal merchandise.
Family Dollar’s assortment consists primarily of consumable
merchandise and home products. The complementary offerings enable
the Dollar Tree and Family Dollar brands to expand categories and
to deliver a broader, more compelling assortment to all
customers.
- Generates significant synergy
opportunities. Dollar Tree expects to generate significant
efficiencies through sourcing and procurement, format optimization,
SG&A leverage, and its distribution network. The Company
anticipates that the transaction will result in an estimated $300
million of annual run-rate synergies to be fully realized by the
end of the third year post-closing.
- Enhanced financial performance and
improved growth prospects. Dollar Tree will be better
positioned to invest in existing and new markets and channels and
to grow its store base across multiple brands. The combined company
expects to generate significant free cash flow, enabling it to pay
down debt rapidly.
J.P. Morgan Securities LLC acted as exclusive financial advisor
to the board of directors of Dollar Tree, and J.P. Morgan Chase
Bank, N.A. committed to provide bridge financing for the
transaction. Wachtell, Lipton, Rosen & Katz and Williams Mullen
acted as legal counsel to Dollar Tree in connection with the
transaction. Morgan Stanley & Co. LLC acted as exclusive
financial advisor to the board of directors of Family Dollar in
connection with the transaction. Cleary Gottlieb Steen &
Hamilton LLP acted as legal counsel to Family Dollar in connection
with the transaction.
About Dollar Tree, Inc.
Dollar Tree, a Fortune 500 Company, now operates more than
13,600 stores across 48 states and five Canadian provinces. Stores
operate under the brands of Dollar Tree, Dollar Tree Canada, Deals
and Family Dollar. To learn more about the Company, visit
www.DollarTree.com.
Forward Looking
Statements
A WARNING ABOUT FORWARD-LOOKING STATEMENTS: Our press release
contains "forward-looking statements" as that term is used in the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements address future events, developments or results and
typically use words such as believe, anticipate, expect, intend,
plan, forecast, or estimate. For example, our forward-looking
statements include statements regarding the merger with Family
Dollar, including the benefits, results and effects of the merger,
future financial and operating results, including estimated
synergies, expectations concerning the combined company's plans,
objectives, expectations (financial or otherwise) and intentions.
Risks and uncertainties related to the proposed merger include,
among others, difficulties related to integration of the proposed
merger and our ability to obtain cost savings and synergies
contemplated by the merger, unexpected costs, charges or expenses
resulting from the proposed merger, and the outcome of pending or
potential litigation or governmental investigations. For a
discussion of the risks, uncertainties and assumptions that could
affect our future events, developments or results, you should
carefully review the “Risk Factors,” "Business," and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” sections in our Annual Report on Form 10-K filed March
13, 2015. We are not obligated to release publicly any revisions to
any forward-looking statements contained in this press release to
reflect events or circumstances occurring after the date of this
report and you should not expect us to do so.
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version on businesswire.com: http://www.businesswire.com/news/home/20150706005648/en/
Dollar Tree, Inc.Randy Guiler, 757-321-5284Vice President,
Investor Relationswww.DollarTree.com
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