Dollar Tree Inc. agreed to acquire Family Dollar Stores Inc. in a cash-and-stock deal that values the struggling discount retailer at about $8.5 billion, the Wall Street Journal reported today. The agreement, which provides Family Dollar with a roughly 23 percent premium over the company's closing stock price on Friday, comes as activist investor Carl Icahn has been pushing for a sale of Family Dollar and threatening to replace the discount retailer's board. Icahn has amassed a nearly 9.4 percent stake in Family Dollar, according to a recent regulatory filing. Dollar stores have been altering their merchandise lineups to hang on to customers they gained during the recession, as well as to continue to attract those struggling in the current economic environment. The retailers also are facing growing competition from Wal-Mart Stores Inc., which is opening smaller locations.
