Dollar Tree stock rises as company completes Family Dollar sale to Brigade, Macellum

Investing.com - Dollar Tree (NASDAQ:DLTR), currently valued at $21.75 billion, has completed the sale of its Family Dollar business to private investment firms Brigade Capital and Macellum Capital for approximately $1 billion, the company announced Tuesday. According to InvestingPro data, the company has shown strong momentum with a 44.82% price return over the past six months.

The transaction is expected to yield approximately $800 million in net proceeds for Dollar Tree and generate an additional cash tax shield of approximately $375 million, slightly higher than the previously expected $350 million.

The divestiture allows Dollar Tree to focus its management efforts and capital resources exclusively on the Dollar Tree banner, while reducing ongoing capital expenditure and operating expense burdens.

Dollar Tree will now be reimbursed for providing shared services to Family Dollar, which is estimated to boost second-half 2025 income by $85-$90 million, or $0.30-$0.35 in earnings per share.

Truist Securities maintained its Buy rating on Dollar Tree with a $109.00 price target, noting the sale "eliminates the remote possibility of a deal falling apart" and enables the company to "pad their already healthy balance sheet to accelerate shareholder returns/buybacks."

In other recent news, Dollar Tree has completed the sale of its Family Dollar business to 1959 Holdings, LLC for approximately $1.01 billion. The transaction, which closed over the weekend, resulted in net proceeds of about $800 million for Dollar Tree. Following the sale, Dollar Tree’s total assets decreased significantly, while shareholders’ equity saw a slight decline due to an estimated loss on the sale. In terms of earnings, Dollar Tree reported a notable increase in pro forma income from continuing operations, both for the recent quarter and the fiscal year ended February 1, 2025.

Bernstein SocGen Group recently raised Dollar Tree’s stock price target to $86, maintaining a Market Perform rating, citing strong comparable sales despite potential earnings volatility from tariffs. Meanwhile, UBS analysts reaffirmed their Buy rating with a price target of $108, noting confusion in recent guidance as an opportunity. Truist Securities also increased their price target to $109, highlighting strong first-quarter performance and expressing confidence in Dollar Tree’s sales momentum.

Piper Sandler raised their price target to $93, maintaining a Neutral rating, and acknowledged Dollar Tree’s efforts to mitigate tariff impacts through strategic measures. Despite some challenges, analysts generally see potential for Dollar Tree’s growth, with varying expectations for the company’s financial outlook.

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