Dollar Tree’s Merger Deal with Family Dollar Stores Deferred till July
A merger deal, which was expected to find closure by May, has not yet seen the light of the day. Dollar Tree Inc has found itself caught in a labyrinth of regulatory hurdles and antitrust obligations, putting off its intended merger to July.
Dollar Tree Inc, popular chain of discount variety stores that sells items for $1 or less, had plans to buy Family Dollar Stores Inc, in a deal settled at $9 billion. However, it is going through a rough patch presently, awaiting approval from the US Federal Trade Commission. For getting this approval, it has announced its disinvestment plans, wherein it will sell approximately 330 Family Dollar stores representing approximately $45.5 million of operating income. In a statement that came out on Thursday, the company said that it was on the lookout for a divestiture buyer.
Owing to the uncertainty that prevailed, the shares of Dollar Tree Inc plunged by 4.3 percent to close at $73 in early trading. Sales knocked down by about 3 percent in premarket trading.
Even the last quarter results present a similar picture. For the period ended May 2, Dollar Tree posted a profit of $69.5 million, which was 34 cents a share, down from $138.3 million, or 67 cents a share, last year. However, with respect to net sales and earnings growth, the company met its expectations. Net sales grew by 8.8 percent to $2.18 billion, against estimates of $2.15 billion to $2.20 billion, whereas, company’s earnings amounted to 71 cents per share, against the expected 69 cents to 74 cents a share.
Next quarter projections by Dollar Tree peg per share earnings at 63 cents to 68 cents and $2.17 billion to $2.23 billion in net sales. However, according to Thomson Reuters, analysts have anticipated earnings of 70 cents a share and $2.23 billion in revenue for the discount chain.
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