Family Dollar approves deal with Dollar Tree

It was announced this morning that Family Dollar shareholders approved the proposed $8.5 billion merger with Dollar Tree, ending months of speculation over whether Dollar Tree or Dollar General would merge with Family Dollar.

According to reports, the combined companies will operate more than 13,000 stores in 48 states and Canada, with sales of more than $18 billion.

As previously reported (and blogged about: Family Dollar rejects Dollar General's higher offer, to pursue deal with Dollar Tree; and Dollar General not giving up on Family Dollar acquisition), Dollar General offered $9.7 billion, but in order to approve such a deal, the Federal Trade Commission would require about 4,000 store divestitures, compared to about 300 for the deal approved today.

After Family Dollar twice delayed the shareholder vote, Dollar Tree threatened to walk away from its offer if the deal wasn't approved this week.

The companies expect the deal to close as early as March. Dollar Tree CEO Bob Sasser will lead the merged company, with Family Dollar CEO Howard Levine reporting to Sasser.

Dollar General may be out of the bidding for Family Dollar

It was reported earlier this week that analysts believe Dollar General may be dropping its bid for Family Dollar. The reason cited is the Federal Trade Commission's requirement for up to 4,000 store divestitures as a result of a deal between the two companies. A deal between Family Dollar and Dollar Tree would require only about 310 store closures.

According to Family Dollar Chairman and CEO Howard Levine, "The Family Dollar board of directors continues to be of the unanimous view that the current Dollar General proposal is not reasonably likely to be completed on the terms proposed."

Given that Dollar General hasn't increased its store divestiture commitment or its purchase price, one analyst concludes that they are effectively bowing out of the process.