Canadian discount giant Dollarama has made its move Down Under, entering into a binding agreement to acquire The Reject Shop (ASX: TRS) in a deal valuing the Aussie retailer at A$259 million. Under the terms of the agreement, shareholders will receive A$6.68 cash per share — a whopping 112% premium to Tuesday’s closing price of A$3.15.
The offer comes via a Scheme of Arrangement, unanimously recommended by The Reject Shop Board, who say the deal delivers attractive value and certainty to shareholders. The company’s largest shareholder, Kin Group (20.8%), is also on board, having declared its intent to vote in favour of the proposal — subject to the usual caveats like no superior offer and a green light from the Independent Expert.
Franking boost in the mix
Before the scheme is implemented, The Reject Shop Board intends to declare a fully franked special dividend of up to A$0.77 per share. That amount would be deducted from the scheme price, but shareholders may receive franking credits worth up to A$0.33 per share, depending on final ATO guidance.
Importantly, the scheme price does not include the interim dividend of A$0.12 per share already declared and payable on 1 May 2025.
A strong premium and strategic fit
Dollarama’s offer isn’t just generous — it also reflects the company’s bullishness on TRS’s growth potential. The offer represents:
- 112% premium to the last close (A$3.15)
- 108% premium to the 20-day VWAP
- 117% premium to the 6-month VWAP
Dollarama CEO Neil Rossy described the deal as a “compelling opportunity” to expand into a new market, praising the cultural fit and potential for synergies. The Montreal-based company, which operates over 1,600 stores across Canada and holds a 60.1% stake in Latin American chain Dollarcity, sees The Reject Shop as its platform for international expansion.
TRS CEO Clinton Cahn said the partnership would fast-track the company’s store rollout and bolster its ability to deliver value to Australians. “There is strong cultural alignment,” he noted, pointing to shared values and a joint focus on affordability.
What’s next?
The scheme still needs shareholder and court approval, as well as regulatory ticks. A Scheme Booklet and Independent Expert Report will be dispatched in due course, with a shareholder vote expected in June 2025. If all goes to plan, completion is targeted for the second half of 2025.
