Dollar Tree targeting $2.5 billion senior notes to help finance Family Dollar acquisition

By Paul A. Harris

Portland, Ore., Jan. 26 – Dollar Tree, Inc. disclosed in documents filed on Monday with the Securities and Exchange Commission that debt financing backing its acquisition of Family Dollar Stores is expected to include $2.5 billion of senior notes.

The deal is bridged, according to a buyside source, who added that the bridge loan is capped at 9½%.

Financing for the deal also includes a $6.95 billion credit facility via J.P. Morgan Securities LLC, Wells Fargo Securities LLC, Bank of America Merrill Lynch, RBC Capital Markets and U.S. Bank, scheduled to launch at a Jan. 26 bank meeting.

J.P. Morgan is also expected to lead the junk bond deal, the source said.

Proceeds will be used to help fund the acquisition of Family Dollar Stores Inc. in a cash and stock deal valued at $8.5 billon.

Under the agreement, Family Dollar shareholders will receive $74.50 for each share they own, comprised of $59.60 in cash and $14.90 in Dollar Tree stock, subject to a collar.

The financing is expected to be completed in February.

Family Dollar stockholders already approved the transaction but the acquisition remains subject to approval by the Federal Trade Commission. Dollar Tree has made a divestiture proposal to the FTC and anticipates reaching an agreement with the FTC staff as to the specific number and locations of stores for divestiture by the end of January.

Closing of the Family Dollar acquisition could occur as soon as March.

Dollar Tree is a Chesapeake, Va.-based discount store operator. Family Dollar is a Matthews, N.C.-based chain of discount stores.

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