retail news in context, analysis with attitude

The Charlotte Observer reports that Dollar Tree is now saying that when its acquisition of rival Family Dollar is completed, things may not be quite as rosy as presented when it was arguing that it was the better suitor than Dollar General, which was offering more money.

According to the story, Dollar Tree now says that the Federal Trade Commission has identified some 250 stores that will have to be divested for competitive reasons, and that “key employees” could lose their jobs. And, it says that the company's "'substantial indebtedness' could 'materially and adversely affect' its financial position by requiring that a bigger portion of its cash be directed to debt payments rather than capital expenditures and acquisitions."

The story goes on to say that "Combining the two companies may be 'more difficult, costly or time consuming than expected' and the anticipated benefits merger may not be realized, Dollar Tree said, citing the challenges Family Dollar has been recently experiencing as a stand-alone company."
KC's View:
Hard to imagine that this really is much or a surprise to the folks at Dollar Tree. The bigger question, I suppose, will be whether, when Dollar Tree is done acquiring Family Dollar, it will be so loaded down with debt that it is able to be competitive within the space. Dollar Tree has to hope that though it has won the battle, it is still able to win the war.