Dollar Tree has announced the sale of its Family Dollar brand to two private equity firms a decade after buying the business. Photo by Dollar Tree.

News Release

CHESAPEAKE, VA. — Dollar Tree is selling Family Dollar to a pair of private equity firms for $1 billion, ending a decade-long effort to integrate the bargain chain into its business.

The discount retailer announced Wednesday that Macellum Capital Management and Brigade Capital Management will acquire Family Dollar, allowing Dollar Tree to focus on its core operations. The sale comes nearly 10 years after Dollar Tree’s over $8 billion acquisition of Family Dollar in a bidding war with Dollar General.

Dollar Tree struggled to make the acquisition work. Over the last decade, the Family Dollar brand has faced problems with store locations, operations and its supply chain.

The Family Dollar business posted an operating loss of $1.8 billion in Dollar Tree’s latest fiscal year, which ended Sunday, Feb. 1. Dollar Tree also recorded a multi-billion-dollar paper loss in the fourth quarter as it wrote down the value of the Family Dollar brand and its assets.

Last year, the company announced plans to close hundreds of Family Dollar stores. As of Sunday, Feb. 1, Family Dollar operated 7,600 locations, while Dollar Tree had 8,868. In Indiana, there are 220 Dollar Tree stores and 98 Family Dollar locations, according to the company.

Following the sale, Family Dollar will maintain its headquarters in Chesapeake, Virginia, where it moved after the acquisition.

Its new owners face several challenges, including uncompetitive pricing and a customer base that lacks strong loyalty.

Dollar Tree expects to receive $804 million in net proceeds from the sale, along with $350 million in tax benefits from losses on the deal, the company said in its quarterly financial report.

Dollar Tree’s shares surged over 8% to $72.61 on Wednesday morning following the announcement.

The deal is planned to finalize in the second quarter.