'Major Milestone': Dollar Tree Is Selling Its Family Dollar Chain For Over $1 Billion. Here's Why. The buyers are private equity firms Brigade Capital Management and Macellum Capital Management.
By Sherin Shibu Edited by Melissa Malamut
Key Takeaways
- Dollar Tree announced a deal on Wednesday to sell its Family Dollar business to two private equity firms for about $1 billion.
- Dollar Tree bought Family Dollar in 2015 for over $8 billion.
Dollar Tree is selling its Family Dollar business at a discount.
A decade after buying the 66-year-old business, Family Dollar, for $8.81 billion and absorbing the chain's locations, Dollar Tree is agreeing to the chain being acquired by the private equity firms Brigade Capital Management and Macellum Capital Management for just over $1 billion.
The deal was announced on Wednesday and is expected to close next quarter, per Bloomberg. The move will make Family Dollar a private entity, separating it from the public Dollar Tree company.
"This is a major milestone in our multi-year transformation journey to help us fully achieve our potential," Dollar Tree CEO Mike Creedon stated in a press release. "Under the experienced, dynamic leadership of Family Dollar President Jason Nordin, and with the financial support of Brigade and Macellum, Family Dollar will be well-positioned for growth as a private company."
Related: Dollar Tree CEO Says 'Elevated' Theft Is Affecting Profit Margins
Dollar Tree acquired Family Dollar in 2015 and has "struggled" in the decade since to "make the business work," Neil Saunders, managing director at GlobaData, told Bloomberg.
The Wall Street Journal notes that though Dollar Tree and Family Dollar have similar names and both offer products at around the $1 mark, they serve different demographics and sell varying products. Dollar Tree can mostly be found in the suburbs and offers party supplies and crafts, while Family Dollar pops up in cities and sells essentials like groceries and cleaning supplies.
Dollar Tree found that Family Dollar locations were more heavily impacted by inflation and theft, per the Journal. According to Reuters, Family Dollar also struggled to sell products like home decor and apparel as competitors like Walmart and Amazon gained ground.
In 2024, following an unexpected $1.71 billion loss for the quarter ending February 1, 2024, Dollar Tree announced that it would close about 1,000 underperforming Family Dollar stores as their leases expired.
Dollar Tree first stated that it was looking into a sale of Family Dollar in June 2024, following a $41.7 million fine from the U.S. Justice Department in February 2024. The department leveled the fine, which was the largest penalty ever for a food safety issue after discovering Family Dollar distributed food and other items from a rat-infested warehouse.
Related: Dollar Tree Is Raising Its Price Cap to $7: 'The Macro Environment Has Gotten in Our Way'
At the time of writing, there are 7,613 Family Dollar stores in the U.S. and over 8,000 Dollar Tree locations in the U.S. and Canada.
Dollar Tree shares were down about 10% year-to-date for a market value of about $15 billion.
