Dollar Tree completes $1B Family Dollar sale

Chesapeake-based Fortune 500 discount retailer Dollar Tree on Monday announced it has completed the sale of its Family Dollar business segment to New York-based global asset management firm Brigade Capital Management and Macellum Capital Management, a New York-based investment firm, for roughly $1 billion.

Net proceeds from the sale, previously announced in March, are estimated to total approximately $800 million, comprising $665 million paid at closing and about $135 million resulting from the monetization of cash before closing through a reduction in net working capital. Dollar Tree expects the economic impact of tax benefits from losses on the sale to be about $375 million.

“The completion of this transaction marks a defining moment for Dollar Tree,” Dollar Tree CEO Mike Creedon said in a statement. “With a singular focus on our core business, we are doubling down on what we do best — delivering value, convenience, and discovery to our customers every day. Now more than ever before, we are poised to accelerate our growth, innovate faster, and unlock our full potential as a category leader in value retail.”

Dollar Tree acquired Family Dollar in 2015 for $8.5 billion. But last year, the company announced that it would close hundreds of Family Dollar stores.

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

Dollar Tree said in May that the Family Dollar property would be led by Duncan MacNaughton, who will serve as chairman and CEO of the discount retail chain, and that Jason Nordin will continue to serve as Family Dollar’s president. The company also said at the time that Family Dollar will continue to be headquartered in Chesapeake.

Dollar Trees shares were trading at $103.75 shortly before 2 p.m. Monday, the highest share price in six months and up from a low of $61.80 in April.

As a standalone company, Dollar Tree says it will grow through initiatives like increasing product variety, adding new stores and working to attract new customers.

Headquartered in Chesapeake, Dollar Tree operates more than 9,000 stores and 18 distribution centers across 48 states and five Canadian provinces, under the Dollar Tree and Dollar Tree Canada brands. The company employs about 150,000 people.

The Associated Press contributed to this story.