Pet supply retailer PetSmart Inc. has made an agreement to be bought by a private equity consortium led by BC Partners Ltd. for US$8.7 billion, in the largest leveraged buyout of the year.
Activist investor Jana Partners LLC began pushing for a sale after disclosing a 9.9% stake in PetSmart in early July 2014, according to reports. PetSmart said BC Partners, as well as some of its fund investors, including La Caisse de dÃ©pÃ´t et placement du QuÃ©bec and StepStone, signed an agreement to buy the company for US$83 per share. Longview Asset Management, which has a 9% stake in PetSmart, will roll a third of its holding into the deal.
The buyout price represents a 39% premium to PetSmart's closing price of US$59.81 on July 2, 2014, the day before Jana disclosed its stake and called for PetSmart to explore a sale. Jana paid less than US$55 per share on average for its percent stake in PetSmart, according to regulatory filings.
PetSmart, which has about 54,000 employees and operates 1,387 pet stores, said in August 2014 it would explore a potential sale of the company. PetSmart faced mounting investor pressure at a time when fierce competition from large retailers, including Wal-Mart Stores Inc and Amazon, is squeezing specialty stores.
In November 2014, PetSmart reported flat third-quarter net income of US$92.2 million as net sales rose 2.6% to US$1.7 billion.