We reported on the dollar stores hot retail sector in February. Now Dollar General, a public company, has agreed to a buyout offer from private-equity firm Kohlberg Kravis Roberts in an agreement that will take the discount retailer private.

Dollar General shareholders must yet approve the deal but the company’s board recommends that its shareholders vote for it. The company estimates the deal could close in Q3 this year.

While based in the Nashville suburb of Goodlettsville, Dollar General operates approximately 8,260 stores.

Kohlberg Kravis has agreed to pay $22 per share for each Dollar General share. This price represents a 31.1 percent premium over the stock’s March 9 closing price on the New York Stock Exchange.

Dollar General CEO David A. Perdue believes the transaction provides excellent value for the shareholders, representing a significant premium and cash buyout.

Dollar General’s February sales from stores that were open at least one year increased 4.9 percent, which was better than the Wall Street forecast of 4.6 percent increase. The company’s total sales for February increased 7.8 percent ($695.6 million up from $645.4 million).

Dollar General has approximately 64,500 workers and posted 2006 earnings of $350.2 million on sales of $8.58 billion.

As stated in our previous post, dollar stores are changing the way America shops by changing the competitive landscape. This opportune sale by a public company to a private equity firm proves the point.