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Months of speculation were put to rest today following the announcement that shareholders of Family Dollar Stores Inc. have approved the long-awaited $8.5 billion deal with Dollar Tree Inc.
The vote, which includes roughly 84 million shares in favor of the proposal, accounts for 74 percent of total outstanding shares, and 89 percent of total shares voted. The proposed merger could be completed as early as March, creating a discount retailer with more than 13,000 stores and sales exceeding $18 billion. The deal is subject to approval by the FTC and finalization of necessary store divestures.
Under the terms, Family Dollar will offer shareholders $59.60 in cash and $14.90 in equivalent Dollar Tree stock for each share of Family Dollar stock.
“The Family Dollar Board of Directors and management team have worked diligently to advance the best interests of all of the company's stockholders, and we are grateful for the support we received for the merger proposal," said Howard R. Levin, chairman and CEO of the Matthews, N.C.-based discounter.
Bob Sasser, CEO of Chesapeak, Va.-based Dollar Tree, echoed Levin's sentiments: "By adding Family Dollar to our portfolio of brands, Dollar Tree will soon operate more than 13,000 stores in 48 states and five Canadian provinces with annual sales exceeding $18 billion," he said, adding that the deal will enhance the company's geographic footprint and diversify its business model.
The merger's pending completion will officially derail Dollar General's $9.7 billion bid, which Family Dollar twice rebuffed citing antitrust concerns. The Goodlettsville, Tenn.-based discounter subsequently took a $9.1 billion offer directly to Family Dollar's shareholders in a hostile takeover attempt.
“Today’s vote is a loss not only for Family Dollar shareholders, but also for consumers across the country who will not have the opportunity to benefit from the cost savings and efficiencies that we believe would have been created by a merger between Dollar General and Family Dollar," said Dollar General Chairman and CEO Rick Dreiling.
"Despite our best efforts over the past few months, Family Dollar’s lack of engagement and a contracted transaction timeline ultimately prevented us from completing this transaction," he said.
Though their seems to be light at the end of the tunnel for the Family Dollar/Dollar Tree merger, the obstacles associated with the months-long deal will leave some uncertainies in their wake, according to Planet Retail Director Kelly Tackett.
"If the terse letter sent by Dollar Tree CEO Bob Sasser last week to Family Dollar CEO Howard Levine is any indication, the path forward is unlikely to be smooth sailing," Tackett told Progressive Grocer. "The prolonged delays in the shareholder vote led to uncertainty in the Family Dollar corporate ranks and further questions as to Levine's ability to lead."