If Dollar Tree wants to be able to buy Family Dollar Stores Inc., it may need to shed more stores that what it initially expected in order to satisfy the antitrust regulators who will review the planned acquisition.
Previously, Dollar Tree stated that it’s expecting to shed less than 300 stores to make the acquisition happen and for it to become the No. 1 and the largest dollar store chain in the U.S.
Last Tuesday, the Federal Trade Commission (FTC) said that it’s reviewing over 500 stores and that it will likely identify more stores for review in the future.
Meanwhile, Dollar Tree said in the filing last Tuesday that the actual number of divestitures may be more or less 300 stores.
The shareholders of Family Dollar has approved the offer of Dollar Tree last month for $8.5 billion cash-and-stock which was a higher offer than what was made by Dollar General. Well, the deal stays subject to the approval of the FTC with the decision expected to come out by the end of the fiscal year. The antitrust regulators are reviewing the deal which has concerns that the acquisition might lead to higher prices of items available in the dollar stores.
In case the deal gets approved by the FTC, it would mean that Dollar Tree would be able to earn over $18 billion in annual sales and gain a total of 13,000 stores under its ownership across the U.S. and Canada. These numbers don’t take into account those possible stores that will be divested.
According to Dollar Tree, over 500 of its stores are now under review by the FTC and they represent an amount between $75 million-$82 million in pro forma adjusted earnings that exclude interest, tax, depreciation and amortization.
The shares of Dollar Tree closed at $74.39 per share last Tuesday on Nasdaq while the shares of Family Dollar closed at $77.49 on the same day on the NYSE.