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Dollar Tree expects to divest 300 stores for FTC nod
16
Jan '15
Regarding its merger with Family Dollar, Dollar Tree said, it and Family Dollar have remained actively engaged with Federal Trade Commission (FTC) regarding its review of the pending merger.

Dollar Tree has made a divestiture proposal and anticipates that now that it will need to divest fewer than 300 stores.

FTC has provided Dollar Tree with a preliminary number of stores, roughly 300, that appear to raise concern.

Dollar Tree expects that a number of stores are likely to be removed from this set due to adjustments to account for the Dollar Tree banner's $1 pricing model.

“However, a small number of other stores may be added due to the existence of Family Dollar stores that adjust prices partially based on the presence of Dollar Tree,” the discount retailer said.

In parallel, Dollar Tree has identified potential divestiture buyers and expects to present potential buyers to the FTC for approval within a month.

Multiple potential buyers will conduct due diligence under non-disclosure agreements over the next several weeks.

Dollar Tree expects initial indications of interest in the near future, and will move to secure FTC approval and finalize divestiture agreements with the selected bidder as soon as practical.

While roughly 150 Family Dollar stores adjust prices due at least in part to the presence of Dollar Tree, about 5,400 Family Dollar stores adjust prices due at least in part to the presence of Dollar General.

Fewer than 50 Family Dollar stores are in zones where prices would rise by more than 2 per cent on average under Family Dollar's pricing rules in the absence of a Dollar Tree store.

By contrast, more than 3,300 Family Dollar stores are in zones where prices would rise by more than 2 per cent on average under Family Dollar's pricing rules in the absence of a Dollar General.

Competition between Family Dollar and Dollar General exhibits none of the mitigating factors noted with respect to Dollar Tree as noted in its December 5, 2014 press release.

Family Dollar and Dollar General offer a similar shopping experience with similar products at similar prices to similar customers in similar locations. Dollar Tree is much different.

Dollar Tree's econometric evidence developed during the course of this matter also supports the conclusion that Dollar General is an extremely close competitor to Family Dollar, far closer than Dollar Tree is.

A special meeting of Family Dollar shareholders to vote on the Pending Merger is scheduled for January 22, 2015. Dollar Tree expects to complete the financing for the merger in February 2015.

Dollar Tree, Inc., a Fortune 500 Company, operates 5,282 stores in 48 states and five Canadian provinces as of November 1, 2014, with total retail selling square footage of 45.8 million. (AR)

Fibre2fashion News Desk - India


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