A deal to merge with PetSmart didn't work out, but Petco has found a buyer. CVC Capital Partners (CVC) and Canada Pension Plan Investment Board (CPPIB) announced a definitive agreement to acquire the pet specialty retailer and its 1,400+ stores from TPG and Leonard Green & Partners for $4.6 billion.
"As the North American pet industry continues to grow, Petco is well positioned with a strong brand, differentiated engagement model, and omnichannel strategy," said James Myers, CEO of Petco, in a press release to announce the deal. "Both CVC and CPPIB have outstanding track records and deep retail experience and resources that will help support our growth initiatives."
"The pet category is a growing and dynamic space within which we believe Petco is ideally positioned to further enhance its leadership position," said Chris Stadler, CVC managing partner. "We look forward to working with our outstanding partners at CPPIB to support the company's growth as it continues to execute its strategy and plans to capitalize on promising market opportunities."
"This investment aligns well with CPPIB's strategy to invest in leading retail businesses with strong omnichannel capabilities," said Shane Feeney, managing director, head of direct private equity, CPPIB. "Petco has a well-known brand and a strong position in the U.S. pet sector. The company has long-term relationships with leading pet food vendors and a significant presence in the fast growing e-commerce channel."
Source: petco.com
Petco, according to reports, had initially informed the U.S. Securities and Exchange Commission it was considering an initial public offering back in August.
The company, which reported an improvement in its profitability for the first six months of 2015, didn't follow through with an IPO under TPG and Leonard Green, instead choosing to seek a merger with PetSmart, which is owned by a consortium led by BC Partnters. When regulators quashed the prospects of a mega-merger between the two top pet specialty chains, the way was opened for CVC and CPPIB to step in. The deal is expected to close in early 2016.