Dollar Tree Acquires Family Dollar from Private Equity Firms

Dollar Tree is selling Family Dollar to a pair of private equity firms for $1 billion after a decade of trying to make its acquisition of the bargain chain fit.

The company acquired Family Dollar for more than $8 billion in 2015, but struggled with supply chain issues, poor store locations and other operational difficulties.

“Basically, Dollar Tree bit off far more than it could chew,” said Neil Saunders, managing director of GlobalData.

Last year, Dollar Tree announced that it planned to close hundreds of Family Dollar stores, and the company had been scouting options for Family Dollar for a while.

The sale will allow Dollar Tree to focus on its core business, according to Mike Creedon, permanent chief executive officer of Dollar Tree.

“This is a major milestone in our multi-year transformation journey to help us fully achieve our potential,” Creedon said.

Bargain chains like Dollar Tree are finding that they have little room to maneuver as Americans have tightened their spending due to consumer confidence in the economy sliding.

Family Dollar will maintain its headquarters in Virginia, where it moved after the sale to Dollar Tree.

“This transaction presented a unique opportunity to play a key role in reinvigorating an iconic business," said Jonathan Duskin, CEO and Partner of Macellum.

The deal is expected to close later in the second quarter, and shares of Dollar Tree rose slightly at the opening bell.