Dollar store chains are duking it out.
Dollar Tree Inc. said Monday that it is buying rival Family Dollar Stores Inc. for $8.5 billion in an effort to broaden its reach as it looks to fend off other retailers invading its turf.
Dollar stores grew during the recession as people across income groups searched for cheaper options. Recently, however, sales have suffered because lower-income customers are facing persistent job instability and slow wage growth in the aftermath of the recession.
With Monday’s announcement, Dollar Tree becomes the biggest player in the segment, with its more than 13,000 combined locations passing current leader Dollar General Corp., which has about 11,300.
The companies did not say whether any Dollar Tree or Family Dollar stores would close. There are five Dollar Tree locations and seven Family Dollar stores in Fort Wayne, with an eighth under construction.
The stores’ names will remain separate under the combined company.
In 2012, Family Dollar Stores Inc. opened a $70 million distribution center in Ashley, creating more than 300 jobs starting at $12 an hour.
“There were rumors of a buyout, but this is a state-of-the-art facility in Indiana near Michigan and Ohio,” said Randy McEntarfer, Ashley’s town planner and vice president. “We know it is well situated to serve the region.”
No matter who owns the distribution center.
“At this point, I can’t see anything but positive things coming from this,” McEntarfer said.
“They were already talking about increasing demand, and now that two companies have combined, you would have to think that this acquisition has a major upside.”
The boards of both companies unanimously approved the deal, but it still needs approval from Family Dollar shareholders.
The Associated Press contributed to this story.