January 12, 2015 / 12:07 PM / 3 years ago

UPDATE 2-Dollar Tree expects to shed less than 300 stores to buy Family Dollar

* Dollar Tree says has identified potential buyers

* Expects to close deal by March

* Family Dollar seeks Jan. 22 vote (Adds analysts' comments, details)

By Ramkumar Iyer and Sruthi Ramakrishnan

Jan 12 (Reuters) - Discount chain Dollar Tree Inc said it expects to divest fewer than 300 stores to satisfy competition regulators scrutinizing its proposed takeover of Family Dollar Stores Inc, and had already identified potential buyers.

Dollar Tree, which had 5,282 stores in the United States and Canada as of Nov. 1, said it would likely sign an agreement with the U.S. Federal Trade Commission by the end of the month on the number of stores it would have to give up.

Wal-Mart Stores Inc and Target Corp could be among potential buyers as they seek to expand their small-format stores, Rahul Sharma, managing director of investment advisory firm Neev Capital, said.

Family Dollar has agreed to be bought by its smaller rival for $8.5 billion in cash and stock, rejecting a sweetened hostile $9.1 billion offer from Dollar General Corp.

Family Dollar has said a deal with Dollar General, the biggest U.S. discount chain, would be blocked by the FTC because Dollar General has not committed to shedding enough stores.

"I think more people are going to be leaning toward Dollar Tree after today," Edward Jones analyst Brian Yarbrough said.

Antitrust concerns made the Dollar General bid appear riskier, he said.

Family Dollar shareholders could vote for Dollar Tree if Dollar General did not further sweeten its offer or commit to divest more stores, Sharma said.

Dollar General was not immediately available for comment.

Family Dollar on Monday asked its shareholders to vote for the Dollar Tree offer at a shareholder meeting on Jan. 22, saying Dollar Tree was unwilling to agree to further adjournments of the vote.

"After two delays, we have been more than reasonable but have reached the end of our patience," Dollar Tree Chief Executive Bob Sasser said in a letter to Family Dollar.

Family Dollar shareholders on Dec. 23 voted to adjourn voting on an agreed takeover by Dollar Tree, indicating interest in the higher offer despite its risk. The meeting had been postponed from Dec. 11.

Dollar Tree said it expects to close the acquisition as soon as March after the FTC's Bureau of Competition approved the store divestitures. The company would present potential buyers for the stores to the FTC within a month.

Shares of Dollar Tree and Family Dollar were slightly down in morning trading. Dollar General shares were down nearly 2 percent. (Editing by Joyjeet Das)

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