WAS THE DOLLAR TREE – FAMILY DOLLAR MERGER SYNERGIC?: FINANCIAL STATEMENTS ANALYSIS

Year 2018, Volume: 7 Issue: 2, 148 - 155, 15.07.2018

Khamis M. Bilbeisi C. R. Narayanaswamy Chau Dinh

https://doi.org/10.17261/Pressacademia.2018.837

Abstract

Purpose- Family Dollar and Dollar Tree were the second and the third largest firms in the discount variety store industry in the United States of America. In July 2014, Dollar Tree made an offer to acquire Family Dollar, citing potential synergy. In this study, we examined whether the expected benefits from the Dollar Tree-Family Dollar merger materialized.

Methodology- We examined the pre-merger and post-merger performance of the two companies by analyzing the companies’ annual financial statements. Improvements in performance of the merged company should be reflected in better financial ratios for the post-acquisition period compared to the pre-acquisition period.

Findings- We found an across-the-board improvement in the financial ratios and a possible decrease in systematic risk after the merger of the two companies.

Conclusion- Our analysis of financial statements indicates possible synergy in the merger of Dollar Tree and Family Dollar.

Keywords

Financial statements, financial ratios, performance, merger, pre and post-merger analysis

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