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Two dollar stores combining: Dollar Tree buys Family Dollar

Some people say Dollar General when they mean Dollar Tree. Some people say Family Dollar when the mean the Dollar Store. What they remember to say in name in each of these stores is the word "dollar." According to the financial section of CNN on Monday, two of these stores are merging, and that will eliminate having to remember a name at least one of the dollar stores. While Dollar Tree has been known as Family Dollar's rival, the former is buying the latter for a total value of $8.5 billion.

The combination of these two stores will not affect shopping that much because customers will continue to buy both Dollar Tree and Family Dollar items. Dollar Tree plans to sell the two brands. The pricing policy of both stores will still stay the same. For example, Dollar Tree stores sell all items for $1 or less, and that will continue. Many items at Family Dollar are sold for more than $1 and their pricing will not change, according to CEO Bob Sasser.

Yahoo! Finance reports that Walmart has been enticing customers with lower incomes to buy items from its chain. The merger of Dollar Tree and Family Dollar will keep customers in the dollar stores. Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors, believes that since this deal will allow operating expenses to be lower, customers will eventually see lower prices than Walmart's. Not only that, but customers will see more groceries and brand-name products. The store will no longer be merely associated with knickknacks or party supplies.

After the merger, Dollar Tree will have more stores than the other dollar stores. Dollar Tree will have 13,000 combined locations and will outnumber the Dollar General stores that have only about 11,300 locations. There is no word yet whether Dollar Tree or Family Dollar will close any of its stores. Dollar Tree in its 5,000 locations will continue operating under its current name and will carry Family Dollar products as well.

Shares of stock in the two stores will be combined which will give stockholders $74.50 per share instead of the current $60.66 per share. So, this merger looks like a good deal for everyone concerned: the store, the customers and the stockholders. Besides, it won't make a difference if we say Dollar Tree or Family Dollar because we will be talking about the same store.

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