Dollar Tree, Inc. (DLTR - Analyst Report) penned a deal with Sycamore Partners, to sell to the latter 330 Family Dollar stores only upon completion of its awaited buyout of Family Dollar Stores Inc. (FDO - Analyst Report).

These 330 stores, which will be operated by Sycamore Partners under the Dollar Express banner, constitute nearly $45.5 million of Family Dollar’s operating income and generate roughly $500 million in annual sales. Sycamore Partners, a private equity company, is likely to benefit from this divestiture as this will take the company forward on its track of achieving significant growth and undertaking meaningful retail investments.

Coming back to Dollar Tree, this divestiture marks a step toward receiving the Federal Trade Commission’s (“FTC”) approval for closing the pending acquisition of Family Dollar. This is because, the FTC required the combined company to shed stores, given the massive store count of these giants.

Dollar Tree’s buyout of Family Dollar was announced in Jul 2014. The former had announced plans to purchase the latter in a cash and stock transaction valued at approximately $9.2 billion, including debt.

The combined chain, with the ability of generating sales of over $18 billion, will be in a better position to reach out to more value-seeking consumers through its vast network of over 13,000 stores. The buyout, which will facilitate Dollar Tree to emerge as a leading discount retailer in North America, will also assist in providing customers with products at a fixed price ($1 or less) under its banner and multi-price point under Family Dollar.

The acquisition will enhance the buying power of the pair, providing better negotiating terms against suppliers. The combined company will be able to offer broader and multiple assortments at more compelling prices. Moreover, the transaction will help in achieving operational and distribution efficiencies as well as cost synergies.

The giant that will arise will be strong enough to single-handedly counter competition from retail bellwethers such as Wal-Mart Stores Inc. (WMT - Analyst Report) and Dollar General Corporation (DG - Analyst Report) in the dollar-discount store segment.

However, the acquisition and the aforementioned divestiture continue to remain under FTC’s review and subject to other customary conditions. Nevertheless, Dollar Tree, which carries a Zacks Rank #3 (Hold) expects to receive FTC’s clearance and complete the merger at the beginning of Jul 2015.