Chesapeake, Va., and New York City — Dollar Tree Inc. has agreed to sell the Family Dollar business segment to Brigade Capital Management LP and Macellum Capital Management LLC for $1 billion. The sales price represents a fraction of the $8.5 billion that Dollar Tree paid for the discount brand in 2015. Family Dollar will remain headquartered in Chesapeake, Va.
Family Dollar, which caters to low-income customers with its roughly 8,000 U.S. stores, has struggled in recent years. In March 2024, Dollar Tree unveiled plans to close approximately 970 underperforming Family Dollar stores.
After a review of potential alternatives for the Family Dollar business segment, the Dollar Tree leadership team and board of directors determined that a sale of Family Dollar to Brigade and Macellum best unlocks value for Dollar Tree shareholders and positions Family Dollar for future success.
“This is a major milestone in our multi-year transformation journey to help us fully achieve our potential,” says Mike Creedon, CEO of Dollar Tree. “We will continue to grow and optimize our Dollar Tree business to maximize value for Dollar Tree associates, customers and shareholders with an enhanced focus on compelling initiatives, including our expanded assortment, significant planned new store openings across the United States and transactions that advance our growth strategy.”
Creedon states that Family Dollar will be well positioned for growth as its own private company with the leadership of Family Dollar President Jason Nordin and the financial support of Brigade and Macellum.
“Since 1959, Family Dollar has served its customers by offering convenient, high-quality products at a great value, and the business is a pillar in communities across the United States,” says Matt Perkal, partner at Brigade. “We look forward to continuing and enhancing Family Dollar as its own enterprise.”
“This transaction presented a unique opportunity to play a key role in reinvigorating an iconic business,” adds Jonathan Duskin, CEO and partner of Macellum.
Duskin also states that Duncan MacNaughton will join the company as chairman. MacNaughton was a former president and chief operating officer of Family Dollar.
Wells Fargo, RBC Capital Markets and WhiteHawk Capital Partners are providing acquisition financing. The transaction is anticipated to close later in the second quarter, subject to standard closing conditions and regulatory approvals.
JP Morgan Securities LLC is serving as financial advisor and Davis Polk & Wardwell LLP is serving as legal advisor to Dollar Tree.
Jefferies LLC is serving as lead financial advisor to Brigade and Macellum, and RBC Capital Markets is also serving as financial advisor in connection with the acquisition of Family Dollar. Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal advisor in connection with the transaction.
As of Feb. 1, Dollar Tree operated 16,500 stores across 48 states and five Canadian provinces. Stores operate under the brands of Dollar Tree, Family Dollar and Dollar Tree Canada.
Brigade is a global asset management firm founded in 2006 with over $27 billion in assets under management. Macellum is an investment firm founded in 2009 that invests in undervalued companies that it believes can appreciate significantly in value through changes in strategy, capital allocation and improvements in operations. Both private equity firms are based in New York City.
— Kristin Harlow
SOURCE: www.REBusinessOnline.com