The Reject Shop snapped up by Canadian retail giant

Australia's biggest discount retailer The Reject Shop is set to undergo a major expansion after today's announcement it will be acquired by a Canadian company in a $259 million deal.

The board of The Reject Shop unanimously agreed that shareholders vote in favour of the deal with retail giant Dollarama.

The Canadian company will acquire all outstanding shares in The Reject Shop for $6.68 a share, representing a 112 per cent premium to its shares' closing price of $3.15 on March 26.

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Dollarama executives say there is an opportunity to expand The Reject Store network in Australia from more than 390 shops to about 700 over the next nine years.

The Reject Shop chairman, Steven Fisher said the deal provided certainty for shareholders.

"Attracting an offer from Dollarama, a recognised leader in the value retail market, is testament to both the meaningful improvement that our incredible team has made to our business over the past few years as well as the significant growth potential that exists for The Reject Shop.

"The all-cash scheme consideration provides attractive value and certainty for all shareholders.

"The board believes the proposed transaction will benefit both shareholders and stakeholders of The Reject Shop and is in line with the board's priority to deliver shareholder value."

The Reject Shop began in 1981 when its first store opened in Melbourne. Over the ensuing decades it has grown to 390 locations across Australia, employing about 5000 staff.

The company generated consolidated sales of $866 million for the last 12-month period ended December 29, 2024.

Dollarama has 1601 stores throughout Canada and also owns a 60 per cent interest in Dollarcity, a growing Latin American discount retailer.

Dollarama says it intends to work with The Reject Shop local management team to "execute its strategic vision for the business" over coming years.

"We look forward to embarking on this new chapter of Dollarama's international growth journey with the local management team and its more than 5000 employees across Australia," aid Dollarama chief executive Neil Rossy.

"Together, we will leverage our core strengths as value retailers with best-in-class merchandising, sourcing and operational expertise."