CHESAPEAKE, Va. – Dollar Tree Inc. announced today that it has agreed to acquire Family Dollar Stores Inc. in a deal that values the struggling discount retailer at about $8.5 billion.

Dollar stores have been altering their merchandise lineups in an attempt to keep the customers they gained during the recession, as well as to continue to attract those still struggling in the current economic environment. The retailers also are facing growing competition from Wal-Mart, which is opening smaller locations. Family Dollar, in particular, has struggled among the deep discounters, cutting prices and closing stores in an effort to remain competitive.

This deal merges the second-biggest deep discounter with the third biggest, Dollar Tree, creating a retailer with total sales topping $18 billion and a stronger rival to the biggest deep discounter, Dollar General. The combined company will continue to operate the Dollar Tree and Family Dollar brands with over 13,000 stores.

In 2012, NACS Magazine addressed the challenge for convenience stores as dollar stores ramped up their competition for customers in the article, “Race for Space.”