Family Dollar Stores, Inc. to Dollar Tree

General Retail/Jul 2014/Morgan Stanley

Deal Information

Target

Family Dollar Stores, Inc.

Acquiror

Dollar Tree

Sector

General Retail

Target Type

Public

Acquiror Type

Strategic

Advisors

Morgan Stanley

Enterprise Value

$9.2B

EV / LTM Sales

EV / LTM EBITDA

11.3x

EV / Fwd EBITDA

Comparable transactions cited by the advisor, excluding the subject transaction.

EV/LTM EBITDA selected range: 9.0x - 11.0x

15 comps


-	Dollar General Corporation	KKR & Co. L.P.	-	-	11.1x	-
-	Duane Reade, Inc.	Walgreen Company	-	-	10.9x	-
-	BJ's Wholesale Club, Inc.	Leonard Green & Partners, L.P. and CVC Capital Partners	-	-	6.8x	-
-	99 Cents Only Stores	Ares Management LLC and the Canada Pension Plan Investment Board	-	-	10.6x	-
-	Alliance Boots GmbH	Walgreen Company	-	-	6.7x	-
-	SuperValu Inc.	Cerberus Capital Management, L.P.	-	-	4.7x	-
-	OfficeMax Inc.	Office Depot, Inc.	-	-	10.9x	-
-	Canada Safeway Limited	Sobeys Inc.	-	-	10.7x	-
-	Harris Teeter Supermarkets, Inc.	The Kroger Co.	-	-	7.3x	-
-	Saks Incorporated	Hudson's Bay Company	-	-	10.2x	-
-	Shoppers Drug Market Corporation	Loblaw Companies Limited	-	-	11.3x	-
-	The Yankee Candle Company, Inc.	Jarden Corporation	-	-	8.8x	-
-	Zale Corporation	Signet Jewelers Limited	-	-	7.5x	-
-	Jos. A. Bank Clothiers, Inc.	The Men's Wearhouse, Inc.	-	-	10.0x	-
-	Safeway Inc.	Albertsons LLC (a portfolio company of Cerberus Capital Management, L.P.)	-	-	5.9x	-
	Mean			-	8.9x	-
	Median			-	10.0x	-

Discount rate and terminal value assumptions the advisor selected for its discounted cash flow analysis.

WACC: 7.0% – 8.0%
Terminal method: Exit multiple
Terminal assumption: 8.5x – 9.5x (one-year forward EBITDA from fiscal year 2019 (twelve-month period ending January 31, 2020))
Forecast basis: Dollar Tree forecasts (primary); Dollar Tree Wall Street case (secondary)
Forecast period: July 25, 2014 through fiscal year 2019 (twelve-month period ending January 31, 2019)

WACC: 7.5% – 8.5%
Terminal method: Exit multiple
Terminal assumption: 7.0x – 8.0x (one-year forward EBITDA from standardized year 2019 (twelve-month period ending January 31, 2020))
Forecast basis: Family Dollar forecasts (primary); also Family Dollar sensitivity case and Family Dollar… more
Family Dollar forecasts (primary); also Family Dollar sensitivity case and Family Dollar Wall Street case
Forecast period: July 25, 2014 through standardized year 2019 (twelve-month period ending January 31, 2019)

Advisor	WACC	Terminal method	Terminal assumption	Forecast basis	Forecast period	Filing
Morgan Stanley	7.0% – 8.0%	Exit multiple	8.5x – 9.5x (one-year forward EBITDA from fiscal year 2019 (twelve-month period ending January 31, 2020))	Dollar Tree forecasts (primary); Dollar Tree Wall Street case (secondary)	July 25, 2014 through fiscal year 2019 (twelve-month period ending January 31, 2019)	Open
Morgan Stanley	7.5% – 8.5%	Exit multiple	7.0x – 8.0x (one-year forward EBITDA from standardized year 2019 (twelve-month period ending January 31, 2020))	Family Dollar forecasts (primary); also Family Dollar sensitivity case and Family Dollar… more Family Dollar forecasts (primary); also Family Dollar sensitivity case and Family Dollar Wall Street case	July 25, 2014 through standardized year 2019 (twelve-month period ending January 31, 2019)	Open