Dollar Tree buying Family Dollar for $8.5 billion

FILE - A customer walks out of a Family Dollar store at Hickory Grove Market in Charlotte, N.C., Tuesday, Nov. 29, 2005. Family Dollar's profits have been lower in each of the past four quarters and the company recently lowered its expectations for sales and earnings for 2006. (AP Photo/Ross Taylor)
FILE - A customer walks out of a Family Dollar store at Hickory Grove Market in Charlotte, N.C., Tuesday, Nov. 29, 2005. Family Dollar's profits have been lower in each of the past four quarters and the company recently lowered its expectations for sales and earnings for 2006. (AP Photo/Ross Taylor)

NEW YORK (AP) — Dollar Tree is buying rival discount store Family Dollar in a cash-and-stock deal valued at about $8.5 billion.

Stockholders of Family Dollar Stores will receive $59.60 in cash and the equivalent of $14.90 in shares of Dollar Tree for each share they own. The companies put the value of the transaction at $74.50 per share.

The boards of both companies have unanimously approved the deal, which is expected to close by early next year.

Shares of Family Dollar Stores Inc., based in Charlotte, North Carolina, spiked 20 percent before the opening bell Monday. Shares of Dollar Tree Inc., based in Chesapeake, Virginia, are up almost 4 percent.

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