Dollar Tree Inc. is set to acquire its competitor Family Dollar Stores Inc. in a transaction valued at $8.5 billion.
The deal is a cash-and-stock transaction valued at $74.50 a share. Family Dollar shareholders will receive $59.60 in cash and $14.90 in Dollar Tree stock for each share that they own. The deal, which is expected to close early next year, valued Family Dollar at an enterprise value of $9.2 billion.
Dollar Tree will finance the acquisition through cash on hand, bank debt and bonds. The respective boards of both chains have already approved the merger. The transaction is still subject to certain customary closing conditions, such as the approval of Family Dollar stockholders.
Certain activist investors, such as Nelson Peltz’s Trian Fund Management and Carl Icahn’s Icahn Associates, have been pushing for a sale of Family Dollar. Peltz has already said he would vote his shares in favor of the merger. Icahn said that while he hoped another buyer might surface — and pay a higher price — the transaction “is a big win for all shareholders of Family Dollar and yet another validation of the activist investment philosophy in general.” Anyone who might consider making a higher offer also would have to factor in a break-up fee of more than $300 million that Family Dollar is obliged to pay Dollar Tree should the current agreement fail to close due to a better offer.
Synergies from the combined merger, such as in sourcing and logistics, are expected to save at least $300 million a year.
Dollar Tree said it will continue to operate the Family Dollar nameplate in addition to those of its own: Dollar Tree, Deals and Dollar Tree Canada. Each chain is a national discount variety store selling merchandise for $1 or less.
Bob Sasser, the chief executive officer of Dollar Tree, called the merger a “transformational opportunity.” He said the acquisition of Family Dollar will give Dollar Tree over 13,000 stores in 48 states and five Canadian provinces, with sales of $18 billion.
According to Sasser, “The acquisition of Family Dollar is consistent with our vision to be the leader in value retailing.”
Sasser said that Howard Levine, the ceo of Family Dollar, will remain with the company and become a Dollar Tree board member upon the closing of the deal.
Levine said, “Today’s announcement represents the successful culmination of a comprehensive strategic review process that our board of directors, working with its financial and legal advisors, began this past winter.”
According to the retail chains, benefits connected with the merger include: creation of a leading discount retailer in North America; complementary business model across fixed- and multi-price point and a broader target range of customers and geographies, given Dollar Tree’s Middle America customers in suburban areas and Family Dollar’s low- and lower-middle income households in urban and rural locations.
Shares of Dollar Tree rose 1.2 percent to $54.87 in Nasdaq trading, while shares of Family Dollar jumped 24.9 percent to $75.74 in Big Board trading.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast