Dive Brief:
- Apollo Global Management announced Monday that it will take a minority stake in PetSmart. The terms of the transaction, which is expected to close in Q4, were not disclosed.
- British-based private equity firm BC Partners, which acquired PetSmart for about $8.7 billion in 2015 and took it private, remains the company’s majority shareholder and will retain control of the board, alongside co-investors GIC and the PetSmart management team. PetSmart and its management team have increased revenue by more than 40% under BC Partners’ ownership.
- Apollo’s investment affirms a “continued growth opportunity” for PetSmart, a retailer with a “strong market position, robust profitability, and strong cash flow generation.”
Dive Insight:
Pet ownership continues rising in the U.S. There’s also an increasing focus on animal wellness and the rising humanization of companion animals. All of those trends position PetSmart for growth too, the companies said in their announcement.
PetSmart also said the company sets itself apart from other pet supply retailers, especially online-only rivals, by its offerings, which include veterinary services, grooming, training, and proprietary brands. PetSmart acquired online pet retailer Chewy in 2017 for $3.35 billion, in what was at the time, the largest ever e-commerce deal of its kind.
With over 1,660 stores in the U.S., Puerto Rico and Canada, PetSmart describes itself as the leading omnichannel pet retailer. It also has more than 200 dog and cat boarding facilities, and it moved further into the pet healthcare sector with the launch of an online pharmacy in 2021.
“The combined expertise of BC Partners and Apollo enables even greater value creation opportunities as we embark on the next stage of growth for the business,” PetSmart CEO J.K. Symancyk said in the announcement. “We are grateful for the continued support of BC Partners, who have been our trusted partner for over eight years and look forward to working with the team at Apollo who bring the highest levels of expertise and whose vision for PetSmart aligns with our own.”
Apollo said it had about $598 billion of assets under management as of March 31.
“We are big believers in PetSmart’s management team and store associates, as well as the company’s growth strategy, operating model, and historical resiliency throughout market cycles, which gave us strong conviction to make this strategic investment alongside BC Partners, its co-investors and management,” said Andrew Jhawar, an Apollo partner. “We are pleased to support PetSmart’s continued success as a meaningful shareholder moving forward, where we will utilize our demonstrated historical experience as a highly successful investor in the consumer, grocery, and retail sectors.”
Bloomberg, citing unnamed people familiar with the matter, said BC Partners is generating three times the return on its original investment.
“We are in the midst of an incredible journey, which we are pleased to share with the entire PetSmart team,” BC Partners chairman Raymond Svider said in Monday’s announcement. “Our conviction in this business, close partnership with management, and the acumen of our investment and portfolio operations team have achieved a flagship investment for the firm, our limited partners, and all stakeholders.”
