Canadian discount retailer Dollarama has entered into a binding scheme implementation agreement to acquire The Reject Shop (ASX:TRS) for $6.68 per share in cash, valuing the Australian company at approximately $259m.
The offer represents a 112% premium to The Reject Shop’s closing share price of $3.15 on 26 March. The Board has unanimously recommended that shareholders vote in favour of the scheme, in the absence of a superior proposal and subject to a favourable report from the Independent Expert.
The Reject Shop’s largest shareholder, Kin Group, which holds a 20.8% stake, has indicated it will vote in favour of the scheme under the same conditions.
As part of the agreement, The Reject Shop may declare a fully franked special dividend of up to $0.77 per share, which would be deducted from the offer price. The scheme consideration will not be reduced by the interim dividend of $0.12 per share already declared and payable on 1 May.
Founded in 1992 and based in Montréal, Dollarama operates over 1,600 stores across Canada and holds a majority interest in Latin American value chain Dollarcity, which runs 588 stores across Colombia, Guatemala, El Salvador, and Peru.
Dollarama CEO Neil Rossy said the acquisition presented a compelling opportunity to expand into a new geography: “With compatible cultures and values, we are confident that the business will have an exciting future as Dollarama’s new and complementary growth platform.”
The Reject Shop CEO Clinton Cahn described the deal as a chance to accelerate store growth and benefit from Dollarama’s operational expertise.
The scheme remains subject to shareholder and court approval, and other customary conditions. A Scheme Booklet will be distributed to shareholders ahead of a vote expected in June, with implementation anticipated in the second half of 2025.
Shares in The Reject Shop are trading 110.16% higher at $6.62.
