Dollar Tree vs Family Dollar, in color (MAP)
As Peltz-backed $8.7B merger nears
Virginia-based Dollar Tree has agreed to buy Charlotte, N.C.-based Family Dollar for $8.7 billion, beating rival suitor Dollar General and pleasing billionaire activist investor Nelson Peltz of Trian Fund Management, who (after Family Dollar shares rose toward the deal price) has promptly dumped most of his stock and grabbed his profits. (Peltz is also trying to break up DuPont Co., having already won cutbacks at Heinz and Kraft, among other targets.)
Dollar Tree, Family Dollar, what's the difference? You can see at a glance on this map of the two store networks: http://www.arcgis.com/apps/SimpleViewer/index.html?appid=90c940f4b0524c4c8b3cb8bd3e95f834 prepared by Matt Felton at Datastory Consulting, Baltimore, and sent me by David Goodman, principal at Equity Retail Brokers, Conshohocken.
The Datastory map shows how Dollar Tree, in the Philadelphia area, concentrates its stores in majority-African American neighborhoods of Philadelphia, Camden, Chester, Wilmington, Norristown, Coatesville, and in some nearby communities (such as northern Gloucester County); while Family Dollar (corrected) is much more a suburban-focused enterprise hereabouts, with city outposts in predominantly white sections of Center City and South Philadelphia.
The pattern seems to repeat around New York, Washington and Baltimore; outside urban areas, both chains have plenty of store concentrations. In Philadelphia, the two chains compete most obviously in the changing and partly immigrant sections of Northeast Philadelphia.
Dollar General actually offered to pay more for Family Dollar -- $9.7 billion vs. $8.5 billion -- but that deal "would have most likely resulted in literally thousands more store closures," says Goodman, given those two chains' more-similar locations. We may still see store closings around Philly, he added, but "I don't think there will be so many" as a General-Family deal would have forced.
Dollar Tree CEO Bob Sasser will lead the combined company, with Family Dollar CEO Howard Levine keeping a board seat.