Dollar Tree Expects To Divest Below 300 Stores For FTC OK For Family Dollar Deal

(RTTNews) - Discount retailer Dollar Tree, Inc. (DLTR) revealed Monday that it expects to reach a preliminary agreement with the Federal Trade Commission staff on the number of stores to be divested by the end of January in order to gain approval for its proposed acquisition of larger rival Family Dollar Stores, Inc. (FDO). Dollar Tree was providing an update of the progress on FTC's review of the pending acquisition.

Dollar Tree noted that the FTC's review shows it will only have to divest less than 300 of its stores in order to complete the proposed deal. It added that a deal is expected to be reached with the FTC by the end of January on the specific number and locations of stores to be divested.

The preliminary count of presumptively problematic stores based on the FTC's most recent economic analysis of the Dollar Tree merger is 310. The figure is expected to be further reduced.

Dollar Tree stated that it has also identified potential divestiture buyers and expects to present potential buyers to the FTC for approval within a month.

Dollar Tree said a special meeting of Family Dollar shareholders to vote on the pending merger is scheduled for January 22, 2015. Dollar Tree also expects to complete the financing for the merger in February 2015. The closing of the merger is projected to be as soon as March 2015.

Meanwhile, Family Dollar issued an open letter to its shareholders saying the Board of Directors unanimously recommends stockholders to vote 'FOR' the Dollar Tree merger at the January 22, 2015, special meeting as the merger will deliver substantial and certain value to its stockholders.

Family Dollar also warned in the open letter that Dollar Tree is not willing to agree to any further adjournments of the special meeting after Family Dollar shareholders pushed back a vote on the deal for a second time to January 22. The postponement was meant to give another rival Dollar General Corp. (DG) time to try to convince Family Dollar to accept its all-cash offer of $80 per share or $9.1 billion.

Dollar Tree agreed to acquire Family Dollar Stores for $76 per share in a cash and stock deal valued $8.5 billion. However, Dollar General is also hotly pursuing Family Dollar, attempting to thwart Dollar Tree with a couple of offers that were rejected outright.

Dollar General's latest was a hostile $80 per share offer for Family Dollar. That tender offer was also rejected by Family Dollar, which continued to support the Dollar Tree deal. Dollar General also extended its tender offer to acquire all outstanding shares of Family Dollar for $80.00 per share until January 30.

Family Dollar has been resisting Dollar General's offers because of regulatory concerns over the amount of stores it would have to close to meet antitrust requirements. The FTC is currently reviewing both potential transactions.

According to Family Dollar, the FTC staff has informed that its most recent economic analysis of the Dollar General proposal indicates that 5,850 stores are presumptively problematic, including 2,965 Dollar General stores and 2,885 Family Dollar stores. After taking into considerations the duplications, the presumptively problematic store would be around 3,500 to 4,000 stores.

However, even is further refinements are made, it will not reach anywhere near the 1,500 stores that Dollar General has offered to divest.

DLTR closed Friday's regular trading session at $69.46, down $1.54 on a volume of 2.16 million shares, and FDO closed at $77.99, down $0.50 on a volume of 2.75 million shares.