Brigade Capital Management and Macellum Capital Management have joined forces to acquire discount store Family Dollar from Dollar Tree in a $1 billion deal, as corporate divestitures continue to fuel PE deal flow.
Dollar Tree originally acquired Family Dollar in 2015 for $9 billion, outbidding its rival, Dollar General.
Dollar Tree is shedding the unit to focus on key strategic initiatives, including store expansion. Financing for the transaction will be provided by Wells Fargo, RBC Capital Markets and WhiteHawk Capital Partners.
In February, Reuters reported that Family Dollar had attracted strong interest from private equity sponsors including Apollo Global Management and Sycamore Partners. The sale concludes the strategic review of the business by Dollar Tree that began in June 2024.
The divestiture aligns with a broader trend: According to PitchBook’s Annual 2024 US PE Breakdown, corporate carve-outs surged in the final quarter of 2024. Private equity sponsors accounted for 11.8% of all US buyouts in the period, marking the highest share since Q4 2016.
According to Eric Bellomo, PitchBook’s emerging technology analyst, Dollar Tree’s value proposition ultimately wasn’t able to deliver enough value-centric items to offset operational challenges with store profitability and supply chain management. Further, he says, this deal aligns with the thesis that 2025 PE transactions will be bifurcated, targeting either luxury shoppers or value-first offerings.
Headquartered in Chesapeake, Virginia, Family Dollar offers a broad selection of merchandise, including household cleaners, name-brand food, and health and beauty products.
J.P. Morgan Securities acted as financial adviser and Davis Polk & Wardwell as legal counsel to Dollar Tree.
Brigade and Macellum enlisted Jefferies as their lead financial adviser, with additional support from RBC. Paul, Weiss, Rifkind, Wharton & Garrison served as legal counsel to the buyers.
Featured image by NurPhoto/NurPhoto via Getty Images
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