Dollar Tree, Family Dollar Merger to Close Monday

Things got complicated during the acquisition process when Dollar General entered the fray as a competitor for the Family Dollar chain.

The lawsuit asserted that competition among discount retailers would be substantially reduced if the merger of Dollar Tree and Family Dollar, a transaction valued at $9.2 billion, went through as originally proposed. The company reported $0.74 earnings per share (EPS) for the quarter, missing the consensus estimate of $0.82 by $0.08.

“This acquisition will extend our reach to low-income customers, while strengthening and diversifying our footprint”, Sasser said in the statement. Dollar Tree offers customers a wide range of goods in suburban stores for $1 or less across most regions of the country. The merger deal between the two companies has been under discussion for the previous year.

Zacks lowered shares of Family Dollar Stores (NYSE:FDO) from a hold rating to a sell rating in a report released on Friday, MarketBeat reports. On average, analysts predict that Family Dollar Stores will post $2.69 earnings per share for the current fiscal year.

Dollar Tree, Inc. (NASDAQ:DLTR) had an volatile session and gained 0.21 points till last call. All of this means there are many operational and logistical decisions ahead for the combined company. Finally, analysts at Telsey Advisory Group raised their price target on shares of Family Dollar Stores from $76.50 to $80.00 and gave the company an underperform rating in a research note on Wednesday, April 8th.

Analysts say combining the two companies will nearly certainly bring the loss of some corporate jobs.

The company also said that Gary Philbin has been named President and Chief Operating Officer of Family Dollar, effective immediately.

Dollar Tree has said that it expects to trim annual costs by as much as $300 million within several years. Dollar Tree remains true to its name, with a large assortment of items at about that dollar mark, while Family Dollar sells many (often more brand-name) items at well above a dollar. As early as August, Dollar Tree had announced that it was willing to divest whatever stores were necessary to complete the acquisition. Also, the Family Dollar CEO, Howard Levine will be a part of the board of directors.