Dollar Tree Inc. on Friday gave an optimistic update on its pending $8.5 billion acquisition of Family Dollar Stores Inc., saying it will have to divest a "relatively small" number of stores to secure U.S. antitrust approval of the deal, which could close as early as February.
Dollar Tree said it would work with the Federal Trade Commission over the next few weeks to determine what divestitures would be required, but said it would likely be a small number of stores that won't be material to its plans for the combined company.
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Dollar Tree has said it would be willing to shed as many stores as possible--or sensible--to get its deal done, and the companies amended their merger agreement to reflect that commitment.
Initially expected to close in November, the deal is aimed at consolidating the market serving low-income shoppers and building a stronger competitor to the likes of Wal-Mart Stores Inc.
Meanwhile, larger rival Dollar General Corp. also is in talks with the FTC about a potential acquisition of Family Dollar. Its $9.1 billion unsolicited bid was shot down in September by Family Dollar, which claimed the antitrust risks were too high.
Dollar General has said it would be willing to divest up to 1,500 stores, but Family Dollar's chief executive, Howard Levine, has said there is a "very real and material risk" that Dollar General's offer would fail to pass a lengthy regulatory process.
At the heart of the FTC's review are the similarities among the discount retailers' businesses and how a combination could affect competition and pricing. Dollar General and Family Dollar both sell a variety of consumable and household products at a range of prices, while Dollar Tree primarily sells goods for $1 or less.
Dollar Tree on Friday touted the regulatory uncertainty of Dollar General's bid, saying the FTC may require divestitures "far in excess" of the 1,500 stores Dollar General has said it would shed.
Dollar General later disputed that claim, saying its documents and data "tell a very different story" from Dollar Tree's argument. The company reaffirmed it looks to Wal-Mart, not Family Dollar, in setting its pricing strategy and said it has provided that evidence to the FTC.
Family Dollar shareholders are scheduled to vote on the Dollar Tree deal at a Dec. 23 meeting.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com