Should Walmart acquire Family Dollar?
If you’ve ever tuned into sports talk radio, you know that there are always fans who suggest trading away players to pick up a favorite from another organization. While there is no possibility of the trade ever taking place, fans like to dream. It seems the same with analysts some times. They come up with merger and acquisition scenarios that might sound okay, but rarely happen.
The latest deal du jour is the suggestion by Credit Suisse analyst Michael Exstein that Walmart acquire Family Dollar. Mr. Exstein makes the case that Walmart is pursuing a small store growth strategy (it plans to open up to 150 units this year) and that Family Dollar already has more than 7,500. Acquiring Family Dollar would put its small store approach on steroids.
The Credit Suisse analyst also thinks Walmart would have a relatively easy time getting Federal Trade Commission approval for a Family Dollar deal because only 19 percent of its stores are within a mile of the dollar chain’s locations.
While Walmart has traditionally shied away from acquisitions in the U.S., it has bought companies to achieve its growth goals in other countries. Walmart declined to comment on the analyst’s speculation.
- Analyst to Wal-Mart’s new CEO: buy Family Dollar to grow in the U.S. – MarketWatch
- Credit Suisse : Walmart should acquire Family Dollar – CNBC
- Do Not Bet on a Family Dollar and Walmart Merger – 24/7 Wall Street
- Wal-Mart’s Next Buy? – The Motley Fool
Do you think a Walmart acquisition of Family Dollar would be a good business move? What do you see as the pros and cons of such a move?