Rockville, Md. — Petco will be acquired for $4.6 billion by CVC Capital Partners (Luxembourg) and Canada Pension Plan Investment Board. The deal should close in early 2016. With its headquarters in San Diego, Petco had been taken private in 2006 in a $1.8 billion buyout by California-based private equity firms.
James M. Myers, CEO of Petco, explains that the new ownership will give Petco access to “deep retail experience and resources” to support growth initiatives.
This acquisition forms part of a broader shakeup at the top tier of the U.S. pet industry, which posted relatively slow growth in 2014, particularly in the core retail pet food category. On the retail side, PetSmart went private in December 2014 with an $8.7 billion sale to a group led by BC Partners. In 2015, mergers discussions between Petco and rival pet superstore PetSmart stalled because of antitrust risk concerns. Between them, the two pet superstore chains account for $10 billion of the $45 billion U.S. retail market for pet products.
Petco, in a press release, refers to continued growth in the “North American pet industry” — raising questions about Petco’s ambitions for the Canadian pet market. Petco currently operates retail locations in Mexico (as well as Puerto Rico), but not in Canada.
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SOURCE: Packaged Facts