Dollar Tree buying Charlotte-based Family Dollar for $8.5 billion

NEW YORK (AP) - In 1959, Leon Levine opened the first Family Dollar store in Charlotte. The company has grown into a Fortune 500 company with 8,000 stores.

Now it's being sold.

Monday, Dollar Tree announced plans to buy the rival discount store chain in an $8.5 billion stock and cash deal.

Stockholders of Family Dollar Stores will receive $59.60 in cash and the equivalent of $14.90 in shares of Dollar Tree for each share they own.

The companies put the value of the transaction at $74.50 per share.

The boards of both companies have unanimously approved the deal, which is expected to close by early next year. Family Dollar would continue to operate under its brand and become a subsidiary of Dollar Tree. Dollar Tree will continue to sell its $1 items.

Family Dollar CEO Howard Levine will remain at the helm and help with the transition, while reporting to Bob Sasser, CEO of Dollar Tree.

Sasser said the merger will save $300 million by sharing best practices and business synergy.

"We think it's the perfect combination frankly," said Sasser. He explained that no stores would be closing as part of the merger, but that locations would be evaluated for possible re-branding.

Reaction near the Family Dollar headquarters on Monroe Road was punctuated with concern about local jobs. "It kind of reminds me of the Harris Teeter/Kroger thing, very similar," said Chuck Foster who was eating at the East 74 Family Restaurant. A lot of Family Dollar employees from the headquarters dine there on a regular basis.

Charlotte's claim to some big business headquarters has taken a hit in recent years with bank mergers, the acquisition of Harris Teeter, and Chiquita's decision to relocate its headquarters.

Shares of Family Dollar Stores Inc. spiked 20 percent before the opening bell Monday.

Shares of Dollar Tree Inc., based in Chesapeake, Virginia, are up almost 4 percent.