Virginia-based Dollar Tree Stores Inc. announced Friday it has signed an agreement to acquire Salt Lake-based Greenbacks All a Dollar for $100 million.
The cash deal is expected to close sometime in June and will include the purchase of Greenbacks' Salt Lake distribution warehouse and its 96 stores, which operate in 10 states.
Dollar Tree, which operates 2,319 stores, is considered the largest of the nation's $1 discount variety store chains. Both chains specialize in products that sell for $1 or less.
"Greenbacks is a well-run company with a fine management team," Macon Brock, chief executive officer of Dollar Tree, said in a conference call Friday. "We are very impressed with the quality of the entire organization. . . . I am therefore confident that this company will fit into the Dollar Tree culture and that it is a good move for our shareholders."
Brock told the Deseret News that the move would improve earnings by about 7 cents per share by next year. Because the two chains have virtually no overlap, no store closings are expected, Brock said.
Changes to the existing Greenbacks locations include expanding the product line with more imported products. Imports currently account for 20 percent of the merchandise sold in Greenbacks, compared to 45 percent of merchandise found in Dollar Tree.
Brock also said that a majority of the newly acquired stores would open on Sunday. Currently the Greenbacks stores operate six days a week. Name changes to store sites are expected to occur over the next 12 months.
Greenbacks was founded with just two stores in 1991 by Farmington resident Brent Bishop, one of five co-founders of the Franklin planner company, now Franklin Covey. Today Greenbacks employs about 1,650 people.
"It's been a growing company and has consistently been profitable," said Bob Sasser, president of Dollar Tree. "It is and has been a well-managed business."
Most of Greenbacks' phenomenal growth has taken place over the past five years, with sales growing at an annual rate of 37 percent. In 2002, the company generated $127.5 million in sales.
Since 1998, the company has opened 70 of its 96 stores. Roughly 20 stores opened in the past year.
Bishop said the sale of his discount chain to Dollar Tree was "the right thing and the best thing to do for the company."
He attributes his success to providing value in the shopping experience, specifically, the products and the people associated with the company.
"Dollar Tree should bring a lot to the table as far as our people go and hopefully as far as the customer goes," he said.
He said he will not take on a managing role in the acquiring company. He instead intends to spend more time working with his foundation, Bringing Hope to Single Moms, which provides mentoring and counseling services to single mothers. He said further venture business deals also likely would be in his future.
Dollar Tree's acquisition will give the chain a presence in each of the contiguous states except for North Dakota. The buyout also adds six new states to Dollar Tree: Colorado, Arizona, Montana, New Mexico, Utah and Wyoming.
Dollar Tree reported first-quarter 2003 sales of $615.6 million. Shares of Dollar Tree closed up 38 cents at $25.73 Friday on Nasdaq.
E-MAIL: danderton@desnews.com