Dollar Tree Set To Offload Family Dollar Business For $1 Billion

Dollar Tree is expected to announce a deal later today in which a consortium of private equity investors will acquire its Family Dollar business for about $1 billion—a steep drop from the $8.5 billion the discount retail chain paid for it in 2015. 

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The Wall Street Journal cited sources close to the deal, who said Brigade Capital Management and Macellum Capital Management would purchase Family Dollar for around $1 billion. The announcement is planned around Dollar Tree’s quarterly results on Wednesday morning. 

Dollar Tree purchased Family Dollar in 2015 for about $8.5 billion, beating Dollar General in a bidding war. The deal combined two of the biggest discount retailers, yet the acquisition was nothing more than a bust. Family Dollar has been the weaker performer, and Dollar Tree has closed or rebranded many of those stores in recent years.

More color on Family Dollar via WSJ:

Though the two names sound familiar and are known for selling cut-rate merchandise, they serve different consumers. Dollar Tree stores are mostly in suburban locations and cater to middle-income households seeking party supplies, crafts or other knickknacks. (Dollar Tree historically sold most items at $1, though recently it has boosted some prices.) Family Dollar locations are more concentrated in urban areas, and sell groceries, cleaning products and other essential items at various price points.

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Since the deal, the Family Dollar business has struggled to grow and been a heavy investment lift. Dollar Tree had already started down the path of slimming it down. In early 2024, it said it would close roughly 1,000 Family Dollar locations as the business battled inflation and store theft, among other industry challenges. 

Wall Street analysts have noted that selling Family Dollar should allow Dollar Tree to invest more aggressively in growth—and, hopefully, make smarter bets. One such bet is its recent acquisition of leases from a group of 99 Cents Only Stores.

In markets, Dollar Tree shares were up 6.5%. Shares are down 10.5% on the year (as of Tuesday’s close) and remain at Covid lows amid value wars that Goldman crowned Walmart as king. 

The question now is whether the consortium of private equity investors will rebrand the “Family Dollar” name to reflect the inflation surge under the previous administration that sent prices soaring.