Dollar Tree sells Family Dollar for $1 billion

(WJET/WFXP) — Dollar Tree has announced that it has reached an agreement to sell Family Dollar in a $1 billion deal, ending the short-lived merger deal that it believed would help the company compete against its larger, growing rivals.

This deal is a significant discount from the original 2015 purchase price of more than $8 billion. Family Dollar will be sold to a partnership between private equity groups Brigade Capital Management and Macellum Capital Management.

“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," said Mike Creedon, CEO of Dollar Tree. "With the support of a dedicated team, Family Dollar will be able to strengthen its commitment to providing affordable and essential goods to customers so they can do more with less.”

Dollar Tree has struggled to incorporate Family Dollar into its business and began reviewing the possible sale of the brand last year. In 2023, the company even unveiled plans to close about 970 underperforming Family Dollar locations.

The sale announced Wednesday is intended to allow both brands to focus on their core operations.

Neil Saunders, managing director of GlobalData, said Wednesday that after acquiring the rival chain, Dollar Tree struggled with supply chain issues, poor store locations, and other operational difficulties.

“Basically, Dollar Tree bit off far more than it could chew,” he said.

Moreover, Dollar Tree had little room to maneuver, particularly in the months leading up to the sale. Americans have tightened their spending, even at bargain chains, as consumer confidence in the economy slides.

As of March 26, Family Dollar has 7,613 stores across the U.S. The company caters to low-income customers predominantly in cities, with prices typically ranging from $1 to $10.

The sale is expected to close in the second quarter of this year.

The Associated Press contributed to this report