Private equity giants Apollo Global Management and Sycamore Partners are among the firms vying to acquire Family Dollar, the discount retail chain owned by Dollar Tree, according to sources cited by Reuters.

Investment firm Brigade Capital Management has also expressed interest in a deal that could be valued in the billions.

Discussions remain in early stages, and a transaction is not guaranteed. Dollar Tree, which has been exploring strategic alternatives for Family Dollar with JPMorgan Chase since June 2023, may choose to retain the business or pursue a spinoff instead.

The speculation around a potential sale drove Dollar Tree’s stock up more than 5% on Thursday before settling slightly lower. Dollar Tree, along with Apollo, Brigade, and Sycamore, declined to comment.

Dollar Tree acquired Family Dollar in 2015 for approximately $9bn, outbidding rival Dollar General. However, Family Dollar has struggled to maintain strong growth, facing stiff competition from Walmart and Target. The retailer has also been affected by reduced consumer spending amid high inflation.

Family Dollar currently operates as part of Dollar Tree’s network of 16,590 stores across 48 US states and five Canadian provinces. The brand contributed approximately $13.7bn in net revenue over the past year, according to Reuters calculations.

Sycamore Partners, with $10bn in committed capital, has a strong track record in retail investments, owning brands such as Staples, Loft, Ann Taylor, Talbots, and Belk. The firm has also been engaged in a potential takeover bid for Walgreens Boots Alliance.

Apollo Global Management, overseeing around $70bn in private equity assets, has experience in retail acquisitions, having previously invested in Michaels and PetSmart.

Brigade Capital, primarily known for credit investments, manages approximately $27bn in assets. Last year, it joined Arkhouse Management in an unsuccessful bid for Macy’s.

With multiple bidders in play, the competition for Family Dollar could intensify in the coming months as private equity firms look to capitalize on the discount retail sector.