NEW YORK ( TheStreet) -- Dollar Tree (DLTR - Get Report) and Family Dollar (FDO) have moved one step closer to joining a growing list of brick-and-mortar retailers vacating locations en masse across the country.
On Thursday, Family Dollar shareholders approved the $8.74 billion sale of the company to Dollar Tree in what has been a heated six-month process heavily contested by competitor Dollar General (DG - Get Report) . "By adding Family Dollar to our portfolio of brands, Dollar Tree will soon operate more than 13,000 stores in 48 states and five Canadian provinces with annual sales exceeding $18 billion," Dollar Tree CEO Bob Sasser said in a statement immediately following the vote's results. Dollar General operates about 11,500 stores in 40 states.
The Family Dollar banner will live on for the time being, with Sasser assuming the CEO position of the combined company. Family Dollar's longtime CEO Howard Levine will join the board and help oversee the operations of the Family Dollar brand his father Leon founded in 1959.
The next hurdle for this proposed dollar store mega merger to climb over will be getting approval from the Federal Trade Commission (FTC). But Dollar Tree said it expects to reach a preliminary agreement with the FTC on the list of stores to be divested, the number of which could approach 500, in order for the deal to go through.
In a statement to TheStreet, Dollar Tree stressed that a divesture means the stores will have to be sold to another discount retailer. Family Dollar stores range in size between 7,500-9,500 square feet, compared to 8,000-10,000 square feet for Dollar Tree. Some of the relatively small locations would be ideal for a pharmacy run by CVS Health Corp. (CVS - Get Report) , where store sizes range from 5,000 to 30,000 square feet. It would also allow CVS to provide pharmaceuticals and basic preventive care services to newly insured lower income Americans.
The sites are likely too tiny for Walmart's (WMT - Get Report) Neighborhood Market concept, where stores average 40,000 square feet and include the sale of fresh and packaged foods. But they could be a nice match for the retailer's former Express store model, which resemble convenience stores and average about 12,000 square feet. These Express Stores have since been rebranded as Neighborhood Markets but still retain their smaller size.
Dollar Tree told TheStreet it does not have the timing of the actual sales of the stores earmarked for divesture, nor the exact locations. The company believes the merger could go through as soon as March of this year.
The eventual, and necessary, divestitures by Dollar Tree, which would amount to an exit from a particular town, will coincide with many other brick-and-mortar retailers downsizing amidst a changing retail landscape.
Unlike the divestitures at Dollar Tree, the likes of Staples (SPLS) , Office Depot (ODP - Get Report) , Macy's (M - Get Report) and J.C. Penney (JCP - Get Report) are flat out closing underperforming stores before lease expiration or as soon as a lease expires in order to boost profits. The reasons for the store closures sweeping across the U.S. are numerous, but are headlined by a shift of the population to urban communities from the rural outskirts of America and more buying of merchandise in real-time on tablets and smartphones.
With its initial round of U.S. store closures nearing an end, Staples may announce a new wave of store exits early in 2015 to appease investors seeking better profit margins, including activist shareholder Starboard, which is demanding the retailer buy smaller rival Office Depot.
Office Depot, meanwhile, will have closed 165 stores in 2014, with more than 100 shutting in the fourth-quarter alone. This year, Office Depot is seeking to close 135 stores in attempt to remove 400 U.S. stores from its base by the end of 2015.
Even Best Buy (BBY - Get Report) is likely to get into the mix of retailers abandoning off-mall locations. The company's last major U.S. store closing announcement came in March 2012 when then-CEO Brian Dunn announced the firm's intention to vacate around 50 U.S. big box stores within a year. Since then, the company's U.S. big-box store count has only fallen by three locations to 1,052.
That could change in 2015, however, as current CEO Hubert Joly seeks to weed out less productive locations and better position the business for a future where consumers buy goods on wearable devices. Already, Best Buy has announced the closure of a large box store in Midland, Michigan by Feb. 14 as it could not reach agreeable terms on a lease renewal.
And the disappearance of mall anchors has continued unabated in 2015. Macy's said recently that it will close 14 stores (out of a current total of about 790 Macy's stores) by early spring 2015. The news from Macy's came on the heels of J.C. Penney announcing 40 store closures for this year, or 4% of its store base.