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HARRISBURG — Attorney General Kathleen G. Kane Monday announced the terms of a multi-state settlement that will allow Dollar Tree, Inc. to proceed with its acquisition of Family Dollar Stores, Inc.
The settlement comes in the form of a consent judgment that was reached after 17 states, including Pennsylvania, filed a lawsuit challenging the merger of the companies. They operate two of the largest discount general merchandise retail stores in the nation.
The lawsuit asserted competition 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. As part of the settlement, Dollar Tree is now required to sell 330 Family Dollar stores to a new competitor. The stores are expected to be sold to Sycamore Partners and remain deep discount stores under the new brand Dollar Express.
Attorney General Kane expressed concern that the merger of the companies as initially proposed would have created substantially less competition in 13 areas across Pennsylvania. As part of the settlement, Kane required 19 stores in those areas to be sold.
“These stores are located across Pennsylvania in both small towns and in our larger cities and suburbs,” Attorney General Kane said. “We wanted to ensure there would be competition in these areas and that consumers were being offered the best prices and merchandise.”
In addition to these stores being sold and re-branded as Dollar Express, Dollar Tree will be required to report or notify the Pennsylvania Attorney General’s office of future acquisitions, store relocations or closings in the state.
Kane explained that her office and other state Attorneys General worked with the Federal Trade Commission to conduct a national review of Dollar Tree’s proposed acquisition of Family Dollar. The Attorneys General filed their initial lawsuit and the consent judgment in the Federal District Court for the District of Columbia.
Dollar Tree operates stores under both the Dollar Tree and Deals banners. Stores using the Dollar Tree banner typically price all merchandise for $1 while both Deals stores and Family Dollar stores offer additional merchandise for higher prices. The stores tend to be smaller in size and sell items such as food, home products, apparel, accessories and seasonal items.
Dollar Tree (NASDAQ: DLTR) is headquartered in Chesapeake, Va. and operates more than 5,454 stores nationwide, including more than 232 stores in Pennsylvania. Family Dollar (NYSE: FDO) is headquartered in Matthews, N.C. and operates more than 8,000 stores nationwide, including more than 302 stores in Pennsylvania.
The other states involved in the settlement are Florida, Maine, Missouri, Alabama, Indiana, Iowa, Maryland, Mississippi, Nebraska, Oklahoma, Tennessee, Vermont, Utah, Virginia, Massachusetts and West Virginia.