Dollar Tree, Inc. (DLTR), in an endeavor to expand its geographical footprint beyond the U.S., has crossed into the Canadian market for the first time in its history of acquisitions by agreeing to acquire the assets of the Canadian Dollar Giant Store Ltd.
The acquisition, which involves 85 Dollar Giant stores together with all assets, inventory, leasehold rights and intellectual property, is expected to cost Dollar Tree roughly $52 million (CAD) in cash or $51.5 million. The transaction is expected to reach fruition by mid-November.
As part of the growth stratagem with the market in flux, Dollar Tree appears to be well positioned for making an acquisition as it is flooded with cash and cash equivalents of $429.3 million. The deal is a good prospect for the company to boost its profitability in the Canadian market. It also gives Dollar Tree an opportunity to further exploit its resources and infrastructure by creating more value for its enlarged customers.
Dollar Tree, which sells its products priced at $1 or less, narrates a history of steady growth and outstanding returns to shareholders. The possession of Dollar Giant is an add-on to the company’s approach to make valuable investments to facilitate profitable growth by extending its store base, improving store output and emerging innovative retail formats.
Vancouver, British Columbia-based Dollar Giant, which proffers an extensive collection of excellent general merchandise, contemporary seasonal goods and everyday consumables, puts on for sale all its products at a price of $1.25 (CAD) or less. The company operates in British Columbia, Ontario, Alberta and Saskatchewan.
Dollar Tree’s shares maintain a Zacks #2 Rank, which translates into a short-term Buy recommendation. Our long-term recommendation for the stock remains Neutral.
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