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Dollar Tree Inc. will exit its Family Dollar investment in the second quarter when its $1 billion deal to sell the banner to two private equity firms is expected to close.
The dollar chain said on Wednesday that it reached a deal to sell Family Dollar to Brigade Capital Management and Macellum Capital Management. The transaction is still subject to customary closing requirements. Family Dollar president Jason Nordin will remain at the helm and continue to have oversight of the operation. Dollar Tree said it expects net proceeds from the transaction to total $804 million, plus a tax benefit from losses on the sale to be about $350 million.
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“This is a major milestone in our multi-year transformation journey to help us fully achieve our potential,” Dollar Tree’s CEO Mike Creedon said, adding that the financial support of Brigade and Macellum will position the Family Dollar banner for growth as a private company.
“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. We look forward to continuing and enhancing Family Dollar as its own enterprise,” Brigade partner Matt Perkal said.
Macellum partner and CEO Jonathan Duskin said: “Throughout this process we have met an exceptional group of executives that are dedicated to the company and its customers. We look forward to executing the strategic plan we have developed together.”
Duskin noted that former Family Dollar president and chief operating officer Duncan MacNaughton will rejoin the retailer as chairman.
Dollar Tree said in March 2024 that it would close 970 Family Dollar stores, and in June it put the nameplate up for sale. The $1 billion purchase price represents a significant discount from the $8.5 billion Dollar Tree spent to acquire the banner in 2015. The deal was intended to expand Dollar Tree’s reach from primarily suburban neighborhoods to urban and rural areas.
But Dollar Tree had problems with its acquisition from the start. That’s mostly because the two banners never really meshed, and there were little back-office synergies. Dollar Tree caters to a wider customer base, one that includes middle-income households. Family Dollar’s core base is geared more towards the lower-income consumer. The assortment mix at the two nameplates were also different. While Family Dollar sold inexpensive household items and food, Dollar Tree is focused more on seasonal merchandise.