Dive Brief:
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UPDATE: Petco announced on Monday it had reached a deal to sell itself to private equity firm CVC Capital Partners Ltd. and Canadian Pension Plan Investment Board for approximately $4.6 billion, according to a release from the retailer.
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The acquisition comes after a dual-track process where private equity firms TPG Capital and Leonard Green & Partners pursued both the options of an auction and a possible IPO for the retailer. The announced deal is one of the biggest leveraged buyouts this year, according to the Wall Street Journal.
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TPG Capital and Leonard Green & Partners bought the company for $1.8 billion and took it private in 2006.
Dive Insight:
Petco’s owners apparently hedged their bets and are ready for a sale at a moment when Wall Street is doubtful about retail's future. Pet retail today, however, is a space that is fairly competitive.
Rival PetSmart last year was bought by a London-based private equity firm and took that company private in order to restructure and aim for growth.
These moves, plus some consolidation among players in the space, are a sign of the changing nature of consumers’ approach to their pets, who are more than ever considered members of the family privy to the best in food, toys, and care.
These moves are also a reflection of the high level of competition these days, with general retailers like Target and even grocery stores getting into the pet supplies business.
“We are very excited to partner with CVC and CPPIB to further drive our strategic goal of being the trusted partner of choice for pet parents,” said Petco CEO James M. Myers. “As the North American pet industry continues to grow, Petco is well positioned with a strong brand, differentiated engagement model, and omnichannel strategy.”
“Petco is clearly a leader in the industry, with strong further growth potential and a talented leadership team,” said Chris Stadler, CVC Managing Partner. “The pet category is a growing and dynamic space within which we believe Petco is ideally positioned to further enhance its leadership position."
The deal is expected to close in early 2016, pending the usual approvals.
