Private equity firms Apollo Global Management and Sycamore Partners are among the contenders vying to acquire Family Dollar, the discount retail chain owned by Dollar Tree, according to a report by Reuters citing unnamed sources familiar with the matter.
Investment firm Brigade Capital Management has also expressed interest in the potential deal, which could be valued at several billion dollars.
Discussions are still in the early stages, and sources caution that a deal is not imminent. Dollar Tree may ultimately decide to retain Family Dollar or consider other strategic alternatives. The retailer has been working with JPMorgan Chase since June 2023 to explore options, including a sale or spinoff.
The news of potential interest in Family Dollar sent Dollar Tree’s stock soaring more than 5% on Thursday before paring back some gains. The company, along with Apollo, Brigade, and Sycamore, declined to comment.
Dollar Tree acquired Family Dollar in 2015 for approximately $9bn, outbidding rival Dollar General. However, Family Dollar has since struggled to drive growth and attract new customers, particularly in the face of competition from larger retailers like Walmart and Target. The discount chain has also been impacted by reduced consumer spending due to high inflation.
As of November 2024, Dollar Tree operated 16,590 stores across 48 US states and five Canadian provinces under its Dollar Tree, Family Dollar, and Dollar Tree Canada brands. Family Dollar alone generated approximately $13.7bn in net revenue over the past year, according to Reuters calculations.
Sycamore Partners, a retail-focused private equity firm with $10bn in committed capital, has extensive experience in the sector, owning brands such as Staples, Loft, Ann Taylor, Talbots, and Belk. The firm has also been attempting a takeover of Walgreens Boots Alliance in recent months.
Apollo Global Management, which oversees about $70bn in private equity assets, has a history of acquiring and investing in retailers, including arts and crafts chain Michaels and pet supply giant PetSmart.
Brigade Capital, a firm managing around $27bn in assets, is primarily known for credit investments. Last year, it partnered with Arkhouse Management in an unsuccessful bid to acquire department store chain Macy’s.
