B C Partners consortium to acquire US pet food retailer PetSmart for $8.7 bn
15 December 2014
A consortium led by private equity firm B C Partners yesterday clinched a deal to buy US pet products retailer PetSmart Inc for $8.7 billion, the largest leveraged buyout of the year.
The consortium that includes funds advised by BC Partners and several of its limited partners, including La Caisse de dépôt et placement du Québec, and StepStone, has offered to pay $83.00 per share in cash, a premium of around 39-per cent over PetSmart's closing share price on 2 July 2014, the day before PetSmart said that it would explore a sale.
The sell-off comes after the company came under pressure from two of its biggest shareholders like Jana Partners with a 9.8 per cent stake and Longview Asset Management with 9 per cent, who felt that the company was under-performing.
It has since been working with JP Morgan Securities and Wachtell, Lipton, Rosen & Katz assisting in the process.
Other bidders in the race were Apollo Global Management, KKR & Co, Blackstone Group, and Clayton, Dubilier & Rice.
Jana Partners, which had bought its stake for $55 a share, has agreed to tender its shares to the offer.
Last month Reuters had reported that private equity firms KKR & Co and Clayton, Dubilier & are preparing to table a more than $7.5 billion bid to take PetSmart private. (See: KKR and CD&R to bid $7.5 billion for US pet food retailer PetSmart)
The deal by B C Partners would top Blackstone Group's $5.4 billion acquisition in July this year of industrial-products maker Gates Global, Bloomberg said.
"We are pleased to have reached this agreement with BC Partners, which maximizes value for all of our shareholders and best positions PetSmart to continue to meet the needs of pet parents," said Gregory Josefowicz, chairman of PetSmart. "This transaction represents the successful conclusion of our extensive review of strategic alternatives."
''We are very pleased to add PetSmart to our portfolio of investments. PetSmart is an iconic brand and the category leader in the growing pet retail industry. We look forward to working with management to continue growing PetSmart's business and executing against its recently announced strategic initiatives,'' said Raymond Svider, a managing partner at BC Partners.
Founded in 1986, Phoenix-based PetSmart is the largest specialty retailer of pet supplies in the US.
It employs around 54,000 people and operates 1,387 stores and 201 in-store PetSmart PetsHotels dog and cat boarding facilities in the US, Canada and Puerto Rico.
PetSmart not only provides pet food and pet products but also offers dog training, pet grooming, pet boarding, while its PetSmart Doggie Day Camp offers day care services and pet adoption services.
PetSmart also holds a 20.5-per cent stake in Medical Management International, the operator of Banfield Pet Hospital.
The company has a market cap of $7.8 billion and posted net income of $420 million last year on revenues of $6.8 billion.