Investors led by London-based private equity firm BC Partners have acquired Phoenix-based retailer PetSmart for $8.7bn, in a last-minute move to outbid front-runners Apollo Global Management. The deal marks the end of an auction process that has lasted weeks and seen bids made from Kohlberg Kravis Roberts & Co. and Clayton Dubilier & Rice.
BC Partners, former owner of major UK brands Foxtons and Phones4U, will pay $83 per share for PetSmart
BC Partners, former owner of major UK brands Foxtons and Phones4U, will pay $83 per share for PetSmart, according to a press release – a whopping 46.2 percent mark-up from May this year, before the option of acquisition was being explored. PetSmart employs 54,000 employees in 1,387 stores across the US, Canada and Puerto Rico, and last month, it reported third-quarter net income of $92.2m and a sales rise of 2.6 percent, to $1.7bn.
Investors Longview Asset Management and activist fund Jana Partners, the latter of which bought a stake in the company earlier this year, had been pushing for a sale as the company struggles against increased competition from larger-scale retailers, namely Amazon and Wal-Mart. Jana Partners had allegedly threatened to overthrow management and elect its own board of directors if the deal was deemed unsatisfactory; an unlikely move now, considering the closing price.
“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,” read a statement from Gregory P. Josefowicz, chairman of PetSmart, within the release. “This transaction represents the successful conclusion of our extensive review of strategic alternatives.”
In a year defined by huge mergers, this is the biggest private equity deal announced globally in 2014, eclipsing Blackstone’s acquisition of Gates Global for $5.4bn in June by a long shot.
