Canadian retail chain Dollarama has agreed to acquire Australian discount retailer The Reject Shop for A$6.68 per ordinary share in cash.
Dollarama will purchase all outstanding ordinary shares of The Reject Shop, placing the valuation of the retailer’s share capital at A$259m ($163m).
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The Reject Shop, with its headquarters in Melbourne, operates a network of 390 stores across Australia, with a workforce exceeding 5,000.
In the 12 months to 29 December 2024, the retailer recorded consolidated sales of A$866m.
Dollarama president and CEO Neil Rossy stated: “Identifying the right opportunity to expand into new geographies and build on our track record as a leading value retailer in Canada and Latin America has been a key objective for the Dollarama team.
“With this acquisition, we have a unique and compelling opportunity to bring our differentiated value proposition to a new market which presents a clear path for growth through an established platform.”
The deal will be completed through an Australian scheme of arrangement under which the The Reject Shop’s board will advise shareholders to vote in favour of the proposed arrangement.
Kin Group, The Reject Shop’s principal shareholder which holds 20.8% of the outstanding shares as of the announcement date, intends to back the arrangement.
The completion of this transaction depends on standard closing conditions and obtaining necessary regulatory and court approvals.
The parties anticipate finalising the deal in the latter half of 2025.
Dollarama sees potential for expansion of the retailer within Australia’s market, projecting an increase from the current 390-plus stores to 700 by 2034.
The funding for the acquisition will come from a combination of Dollarama’s cash reserves and available credit under its revolving credit facility.
While the transaction is not expected to significantly affect Dollarama’s net earnings per share immediately, the company anticipates a minimal impact on its pro forma adjusted net debt-to-EBITDA [earnings before interest, taxation, depreciation and amortisation] ratio once completed.
In December 2024, Dollarama reported a 5.7% increase in sales for the third quarter of the fiscal year 2025, reaching C$1.56bn ($1.108bn).
