KKR Knows the Value of a Dollar Store
Kohlberg Kravis Roberts & Co. (KKR) is in the dollar store business. The firm, it was announced yesterday, is the new owner of Dollar General after paying $6.9 billion to take the company private.
Dollar General has struggled in recent years as rising energy costs and other financial challenges have hurt the chain’s core low-income consumer base. Last November, Dollar General announced it would slow the pace of new store openings while closing 400 outlets. At the time, the company said it would dedicate more of its capital outlays to remodeling or relocating existing stores. The expectation now is that KKR will increase the pace of store closings.
"Going private gives them a year or two to rebuild their business and invest more aggressively to expand without Wall Street pressure,’ Burt P. Flickinger III, managing director of Strategic Resource Group, told Bloomberg.
KKR has been very busy in attempts to pick up other retail properties. Yesterday, Alliance Boots, the largest drugstore chain in the U.K., said it had rejected an $18.8 billion offer from KKR.
Separately, KKR is reported to be joining a group including Bain Capital in an attempt to buy the Australian retailer Coles Group. KKR has made a number of bids, all rejected, for Coles over the past year.
Discussion Questions: What explains the high degree of interest that private equity firms have had in recent years when it comes to retailers? What is your reaction to this deal and what it will mean for Dollar General and its customers?
- Dollar General to Be Acquired by KKR for $6.9 Billion – Bloomberg
- Alliance Boots Rejects KKR’s $18.8 Bln Approach – Reuters/MSN Money
- Bain Capital Joins JJR team for Coles Bid – Reuters UK