Why Family Dollar Store (FDO) Stock Is Surging In Pre-Market Trading Today

NEW YORK (TheStreet) -- Shares of Family Dollar Stores Inc. (FDO) are climbing higher by 22.82% to $74.50 in pre-market trading on Monday following the announcement that the general merchandise retailer will be purchased by Dollar Tree Inc. (DLTR) for almost $8.5 billion.

The merger will create the largest discount retailer in North America, Reuters reports.

The retailer will operate over 13,000 stores in 48 states and five Canadian provinces, with annual sales expected to exceed $18 billion, Family Dollar said.

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The transaction is expected to close in early 2015.

Shares of Dollar Tree are up 9.90% to $59.59 in pre-market trading today.

Separately, TheStreet Ratings team rates FAMILY DOLLAR STORES as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate FAMILY DOLLAR STORES (FDO) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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