Dollar Tree plans to sell Family Dollar to private equity firms for $1B

Chesapeake-based Fortune 500 discount retailer Dollar Tree has reached a deal with Brigade Capital Management, a New York-based global asset management firm, and Macellum Capital Management, an investment firm with headquarters also in New York, to acquire its Family Dollar brand for about $1 billion after a decade of trying to make its acquisition of the bargain chain fit.

Family Dollar will continue to be headquartered in Chesapeake, according to a Wednesday news release.

“This is a major milestone in our multiyear transformation journey to help us fully achieve our potential,” Dollar Tree CEO Mike Creedon said in a statement. “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 joined Dollar Tree in 2022 as chief operating officer and was appointed interim CEO in November after former CEO Rick Dreiling stepped down, citing health problems. Creedon joined the company following its C-suite shakeup in summer 2022.

Dollar Tree acquired Family Dollar for $8.5 billion in 2015 after a bidding war with rival Dollar General.

The union didn’t come with a happy ending. Neil Saunders, managing director of GlobalData, said 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.

Last year Dollar Tree announced that it planned to close hundreds of Family Dollar stores. The company also said at the time that it would record a $950 million impairment against the trade name Family Dollar, on top of a $1.07 billion goodwill charge.

The deal is expected to close in the second quarter of 2025, depending on regulatory approvals and standard closing conditions. Dollar Tree estimated that the proceeds from the sale will total about $804 million and that the company will receive $350 million in tax benefits from losses on the sale.

Dollar Tree operates 16,500 stores across 48 states and five Canadian provinces as of Feb. 1. Net sales for the year ending Feb. 1 were $17.6 billion, an increase of 4.7% over the previous year.

The Associated Press contributed to this story.