Discounted Deal Valued At $1B; MacNaughton To Return
Family Dollar Finally Unloaded
By Dollar Tree To PE Investors
Dollar Tree finally unloaded its larger-than-life albatross last month when it announced that it will sell its Family Dollar unit to two private equity firms – Brigade Capital Management and Macellum Capital Management.
To say that Dollar Tree took a haircut on the deal would be a huge understatement. Ten years ago, the Chesapeake, VA-based discounter acquired Family Dollar for $9 billion in an attempt to strengthen its share nationally against dollar store market leader Dollar General.
That deal went south almost immediately. In the past two years, the company had to shutter a large distribution center in West Memphis, AR after the facility was infested with rats. For that indiscretion, Dollar Tree paid a fine of $41.6 billion. In 2023, it recalled more than 300 items from multiple warehouses that were improperly shipped to stores in 23 states because they did not comply with temperature guidelines.
In June 2024, Dollar Tree finally gave up on Family Dollar, announcing that a sale or spinoff was possible. It also accelerated its store closures of the brand, shuttering 600 Family Dollar units last year. Another 370 stores will close during the next 18 months as leases expire.
“This is a major milestone in our multi-year transformation journey to help us fully achieve our potential,” said Mike Creedon, Dollar Tree’s CEO who was named to that post in December 2024, after serving as interim chief executive for about a month. “We will continue to grow and optimize our Dollar Tree business to maximize value for Dollar Tree associates, customers, and shareholders with an enhanced focus on compelling initiatives, including our expanded assortment, significant planned new store openings across the United States, and transactions that advance our growth strategy.
“Under the experienced, dynamic leadership of Family Dollar president Jason Nordin, and with the financial support of Brigade and Macellum, Family Dollar will be well-positioned for growth as a private company. With the support of a dedicated team, Family Dollar will be able to strengthen its commitment to providing affordable and essential goods to customers so they can do more with less.”
Matt Perkal, partner at Brigade, said, “Since 1959, Family Dollar has served its customers by offering convenient, high-quality products at a great value and the business is a pillar in communities across the United States. We look forward to continuing and enhancing Family Dollar as its own enterprise, which we are confident will drive greater success for the business and value for all of Family Dollar’s stakeholders, including employees, customers, and communities.”
“This transaction presented a unique opportunity to play a key role in reinvigorating an iconic business. Throughout this process we have met an exceptional group of executives that are dedicated to the company and its customers. We look forward to executing the strategic plan we have developed together,” added Jonathan Duskin, CEO and partner of Macellum. “In particular, we are excited that Duncan MacNaughton will be joining the company as chairman (he was president and COO of Family Dollar from 2017-2019), where his insights as a former president and chief operating officer of the company, and broader industry experience, will be invaluable.”
MacNaughton, who has had many senior level wholesale and retail posts during his 40-year career including stops at Albertsons, H-E-B, Walmart and Supervalu, added, “I am excited to collaborate with the Family Dollar team and our incredibly capable and supportive new investors to drive the business forward in this next chapter of its evolution. Family Dollar has a tremendous potential to grow and succeed as an independent company, and I am honored to be able to play a role in helping the company fully realize that opportunity.”
Brigade was founded in 2006 by Donald E. Morgan III, CIO and managing partner, and is headquartered in Manhattan.
Macellum was founded in 2009 by Duskin and primarily invests in undervalued companies that it believes can appreciate significantly in value through changes in strategy, capital allocation and improvements in operations. It is also based in Manhattan.
Family Dollar’s headquarters will remain in Chesapeake, VA.
