Dollar Tree Inc. (DLTR) said it will acquire Family Dollar Stores Inc. (FDO) in a cash-and-stock deal that values the discount retailer's shares about at $74.50 a piece.

The deal price, a roughly 23% premium over Family Dollar's closing price on Friday, includes $59.60 in cash and $14.90 equivalent in Dollar Tree shares, the company said.

Family Dollar shares jumped 17% to $71.00 in recent premarket trading.

The deal comes as activist investor Carl Icahn has been pushing for a sale of Family Dollar, and threatening to replace the discount retailer's board.

Family Dollar, with more than 8,100 stores across the country, has been at a crossroads in its retail strategy. Early this year, Chief Executive Howard Levine said the chain was shelving a strategy that used price cuts on some items, while keeping others elevated, and instead would emulate the everyday low price model favored by rivals Dollar General Corp. (DG) and Wal-Mart Stores Inc. (WMT).

Write to Anna Prior at anna.prior@wsj.com

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(END) Dow Jones Newswires

July 28, 2014 06:55 ET (10:55 GMT)

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