Discount retailer Dollar Tree Inc. has agreed to purchase larger rival Family Dollar Stores Inc. for about $8.5 billion.
The deal would create a company with $18 billion in annual sales and more than 13,000 stores, more locations than any other North American discounter, Dollar Tree said Monday.
The sale comes in the wake of troubles for Family Dollar. The chain, based in Matthews, N.C., announced in April that it was closing 370 underperforming stores after its profit plummeted more than 30 percent in the second quarter.
Last month, activist investor Carl C. Icahn disclosed a 9 percent stake in Family Dollar and urged the firm to put itself up for sale.
The cash-and-stock deal is valued at $74.50 per share, a nearly 23 percent premium over Family Dollar’s closing price Friday.
In Monday trading, shares of Family Dollar rose $15.08, or 24.9 percent, to $75.74; and shares of Dollar Tree rose 65 cents, or 1.2 percent, to $54.87.
Dollar Tree, based in Chesapeake, Va., said it would keep the Family Dollar brand. The transaction has been approved by the boards of both companies and is expected to close early next year.