28 April 2017

PetSmart to buy Chewy

PetSmart, a brick-and-mortar pet accessories retailer, is acquiring Chewy in a bid to extend its presence in the e-commerce space. The consideration has not been disclosed, but people familiar with the matter told Recode that the transaction could be worth around USD 3,350 million. According to Zephyr, the M&A database published by Bureau van Dijk, this is the retail sector’s third largest deal to have been announced so far this year.

The sellers include private equity investors Volition Capital, CDIB Capital International and BlackRock, all of which are making a full exit. PetSmart has obtained debt financing from Citigroup and Barclays and aims to complete the acquisition by the second fiscal quarter of 2017, subject to regulatory approvals.

Commenting on the transaction, PetSmart’s chief executive Michael Massey said: “We are focused on improving our customers’ experience in-store and online as we continue to execute against our long-term strategic initiatives.” He also said: “Chewy’s high-touch customer e-commerce service model and culture centred around a love of pets is the ideal complement to PetSmart’s store footprint and diverse offerings.”

PetSmart sells grooming accessories, food and sanitation products for dogs, cats and other small animals. It also provides services like pet grooming and training, as well as veterinary care. The Phoenix, Arizona-headquartered group currently employs over 55,000 associates and operates more than 1,500 stores in the US, Canada and Puerto Rico. Previously traded on Nasdaq, it was delisted from the stock exchange in 2015 following a USD 8,700 million takeover carried out by a BC Partners-led consortium.

Despite having yielded USD 7,000 million in revenue last year, Pet Smart’s same store sales remained flat during the period, according to an undisclosed competitor, as cited by Forbes. While the company still has an edge in areas like pet grooming and on-site veterinary services, it is facing increasing competition from the likes of Amazon and Jet.com, retail consultant Sucharita Mulpuru posited, as reported by the news provider.

Last week, Animal Supply, another pet supplies provider, agreed to buy the animal food and accessories wholesaling business of Lads Pet Supplies. The Federal Way, Washington-based company has also carried out several other acquisitions in recent years, according to Zephyr. This includes its takeover of Holistic Pet Source’s assets and vendor contracts last December. Animal Supply also successfully snapped up the assets of Coast Pet and Wilson Pet Supply in 2015 and purchased RFG Distributing and Pet Food Wholesale in 2013. 

© Zephyr