CVC and Canadian Pension Plan near deal to buy Petco for $4.7B
By Money Times
Nov 24, 2015 11:11 PM EST
Nov 24, 2015 11:11 PM EST
CVC Capital Partners and Canadian Pension Plan Investment Board (CPPIB) are in the advance stage of closing the acquisition process for the takeover of Petco for $4.7 billion.
The joint bid of CVC and CPPIB is said to have outbid other firms in the buyout auction for Petco. According to the sources in the know, the announcement about the acquisition deal is expected any moment.
The San Deigo-based Petco Holdings already filed in August to go public. At the same time, the company is considering a plan to sell itself.
According to its latest regulatory filing, Petco recorded 12 percent growth in revenues for the 26 weeks ending August. The net income rose 43 percent. However, the debt burden of the company is hovering over $2 billion.
Petco in engaged in supplying and selling of food for pets. The food products of Petco are available at over 1,400 stores in the US. TPG Capital and Leonard Green and Partners bought and sold Petco twice.
First time, they bought Petco for $600million in 2000 year and they went public in 2002. Subsequently, they sold it off. Again in 2006, they bought it back for $1.68 billion.
CVC Capital Partners, Canadian Pension Plan and Petco were not available for providing more details about the acquisition process. TPG and Leonard Green denied to comment on the acquisition deal.
Sources, on condition of anonymity, told the New York Times that CVC Capital Partners and Canadian Pension Plan Investment Board have surpassed a joint bidding offer from KKR & Co and Hellman & Friedman in addition to another offer from Apollo Global Management.
The announcement of the acquisition deal is expected this week, accoridng to Bloomberg.
The bid offer from CVC Capital Partners, Canadian Pension Plan Investment Board is believed to be in advance stage of acquisition process as US pet retailers' owners, private equity (PE) firms TPG Capital and Leonard Green & Partners are considering the finalization of terms.
The acquisition deal is taking place at a time when financial markets are sluggish and private equity firms are facing turbulent situation.
CVC Capital and CPPIB have already mobilized over $3 billion in debt financing to fund theacquisition.
Seeking approval for initial public offering (IPO) for Petco, PE firms TPG and Leonard Green have filed with US Securities and Exchange. If the acquisition offer is less than their expectation of valuation, they would have gone for IPO.
The consolidation is taking place in food for pets segment also. Recently BC Partners-led consortium acquired PetSmart for $8.7 billion a year ago. This acquisition deal was considered to be the largest leverage buyout in the US market in 2014.
According to Petco's IPO document, the US pet industry including food, supplies, veterinary services and non-medical services was valued at $74 billion in 2014. The size of pet industry is poised to touch $92 billion by 2019.
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