Petco Agrees to $1.68 Billion Takeover
Friday, July 14, 2006
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NEW YORK — Petco Animal Supplies Inc., the nation's second biggest pet supplies retail chain, said Friday that it has agreed to be acquired for about $1.68 billion by a private investment group. Its shares climbed 43 percent.
The deal for the San Diego-based company provides the latest example of the attraction that solid retail cash flows and real estate assets have for private equity investors.
The investor firms Leonard Green&Partners LP and Texas Pacific Group are offering $29 per share in cash for Petco, a 45 percent premium over its closing price of $19.45 on Thursday.
Petco said its board unanimously approved the proposed deal. The transaction is expected to close by this year's fourth quarter, pending shareholder and regulatory approval.
Petco shares climbed $8.36 to $27.81 in morning trading on the Nasdaq Stock Market.
The buyers would also assume about $120 million in debt in the deal, Petco said. That would boost the total value of the transaction to $1.8 billion.
Petco is second only to PetSmart Inc. among the nation's biggest pet supply retailers. Petco sells premium pet food, supplies and services with over 775 stores in 47 states and the District of Columbia.
Private equity groups have made several other recent plays for other retailers.
Blackstone Group and Bain Capital agreed to acquire arts and crafts retailer Michaels Stores Inc. for $6 billion in June. Texas Pacific Group and another private equity player Warburg Pincus teamed up in 2005 to purchase luxury department store chain Neiman Marcus Group Inc. for $5.1 billion.
Petco Agrees to $1.68 Billion Takeover
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