February 26, 2016

PetSmart Acquired in Largest Deal of 2014

PetSmart is involved in the largest private equity deal announced globally this year, according to industry analysts. The pet retailer has agreed to be acquired for $8.7 billion by private equity firm BC Partners.

Under the agreement, investors led by BC Partners will pay $83 per share for PetSmart, a 39 percent premium over the company’s closing share price in July.

“PetSmart is an iconic brand and the category leader in the growing retail industry,” said Raymond Svide of BC Partners in media reports.

PetSmart’s stock dropped by 18 percent earlier this year. Last summer, activist investor Jana Partners pressured the pet retail chain to put itself up for sale. Since then, shares have rebounded. However, PetSmart continues to face obstacles as more consumers look to shop online. During the third quarter of this year, net sales increased by 2.6 percent and PetSmart’s $92.2 million net income plateaued compared to the same quarter the year prior.

Executives from PetSmart and BC Partners are planning to cut costs by $200 million in 2015 and anticipate this move will help poise the pet retailer for future growth.

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