BofA/Merrill Lynch Upgrades Dollar Tree (DLTR) to Buy; Counter Bid Unlikey

BofA/Merrill Lynch upgraded Dollar Tree (NASDAQ: DLTR) from Neutral to Buy with a price target of $71.00 after Dollar General (NYSE: DG) has offered to acquire Family Dollar (NYSE: FDO) for $78.50, topping Dollar Tree's bid.

Analyst Denise Chai sees a counter bid as unlikely since: 1) it would require additional leverage; 2) the combination with DG is far more accretive (stated synergies are 2x higher than DLTR deal; and 3) DLTR stated in its S4 filing that its offer is final.

The analyst also notes Dollar Treet will also receive ~$300mn termination fee if Family Dollar accepts the offer which would raise estimated cash per share to $4.66 from $3.19 and likely be used for additional share buybacks.

For an analyst ratings summary and ratings history on Dollar Tree click here. For more ratings news on Dollar Tree click here.

Shares of Dollar Tree closed at $55.61 yesterday.

You May Also Be Interested In

• FirstEnergy Corp. (FE) PT Raised to $35 at BofA Securities
• Piper Sandler Upgrades BlackLine (BL) to Neutral
• NextEra Energy (NEE) PT Raised to $67 at BofA Securities