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Dollar Tree to buy competitor Family Dollar

Dollar Tree is scheduled to open this fall near Wal Mart in northeast Wadena. The discount retailer agreed last month to buy competitor Family Dollar, which already has a location in downtown Wadena, but spokespeople for both companies said there are no immediate plans to close Wadena's Family Dollar location.

As construction continued on the Dollar Tree building near Wal Mart in northwest Wadena, the discount retailer announced last month it had reached an agreement to purchase rival Family Dollar in a cash-and-stock deal worth about $9.2 billion dollars.

Dollar Tree is slated to open on Juniper Avenue Northwest in October, joining the downtown Family Dollar in competition for local bargain shoppers.

So will the combined company close one of the Wadena locations?

"It's a long ways from that happening," said Wadena Development Director Dean Uselman. "As I understand it, it's going to be two separate and distinct entities."

Those kinds of decisions will be made after the transaction closes early next year, said spokespersons for both Family Dollar and Dollar Tree.

"Until further notice, everything is business as usual," said Bryn Winburn, Family Dollar public relations manager.

Winburn noted the Wadena Family Dollar, which employs three full-time and two part-time workers, avoided the latest rounds of closures. In April, the company announced plans to shutter 370 underperforming stores throughout the country, including five in Minnesota (the Sauk Centre location and four in the metro).

Dollar Tree Chief Executive Bob Sasser told Reuters it was "too early to say" whether the company planned to cut jobs or close stores.

Most of the $300 million in annual savings expected by 2018 would come from procurement and distribution, he said.

"(Family Dollar) can produce more sales per square foot in their stores than they are currently producing," Sasser said. "That can be done through expanding the better categories and contracting the lesser categories."

Dollar Tree, which is poised to overtake Dollar General as the nation's biggest discount retailer with 13,000 across the U.S. and Canada, sells a mix of consumables in suburban stores across most U.S. states, as well as discretionary items such as gifts, party goods and greeting cards. Everything has a price tag of $1 or less.

Most Family Dollar stores are in low-income neighborhoods. Its presence is biggest in Texas and the eastern United States, where it mainly sells lower-margin food and household products.

The chain also sells many items at more than $1 and has been struggling to reverse declining sales.

"With a new sheriff in town, Family Dollar will be a much sharper competitor," Sterne Agee & Leach analysts wrote in a note.

To lure Dollar Tree, the Wadena City Council in May unanimously approved a tax increment financing (TIF) agreement with Green Bay-based United Development Group, authorizing up to $140,000 in property tax breaks to build the store and lease it to the retailer.

Dollar Tree will provide about 14 full-time jobs with health insurance benefits that would pay between $10 and $13 an hour, according to a worksheet a city committee used to score the project.

This story contains information from Reuters, a Forum News Service partner.