Petco trades private equity owners
The convoluted ownership history of Petco has just taken an interesting new turn that cost $4.6 billion.
According to a statement release by Petco, funds affiliated with CVC Capital Partners and the Canada Pension Plan Investment Board (CPPIB) entered into a definitive agreement to jointly acquire Petco from a group of investors led by TPG and Leonard Green & Partners for approximately $4.6 billion. The acquisition of the 1,400 store retailer is expected to close in early 2016.
"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 Myers. "As the North American pet industry continues to grow, Petco is well positioned with a strong brand, differentiated engagement model, and omnichannel strategy. Both CVC and CPPIB have outstanding track records and deep retail experience and resources that will help support our growth initiatives."
The ownership change is the latest development in Petco’s growth journey. The company first went public in 1994, but six years later in October 2000 financial troubles left the company vulnerable to a takeover by Leonard Green & Partners and TPG. It looked like the private equity firms might quickly exit the investment after filing for an initial public offering in December 2001 but it took until February 2002 to complete the IPO. The two companies took Petco private again in 2006. Despite all of the ownership drama, Petco grew from about 500 stores in 2000 to 1,400 today.
"We are delighted to have been associated with the Petco team over many years of uninterrupted progress and success and we are tremendously appreciative of CEO Jim Myers and retired CEO and Chairman Emeritus, Brian Devine, and the rest of the Petco team for the outstanding job they've done for our investors," said John G. Danhakl, managing partner of Leonard Green & Partners. "We wish for and expect continued success for the entire Petco family supported by CVC and CPPIB, two of the best in our business."
Going forward, Petco’s new owners are vowing to build further value in the business.
“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. 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. 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," said Shane Feeney, managing director, head of direct private equity with CPPIB. "We look forward to working alongside one of our long-standing partners, CVC, to leverage our collective retail expertise in helping to build further value in the business."