From Petfood Industry:

Merger talks between PetSmart Inc. and Petco Holdings Inc. have stalled because of disagreements over antitrust risks, according to a report.

The risks for a deal hinge on how the Federal Trade Commission would define the pet supply market, reports say. A narrow definition that includes only specialty pet supply stores would make it more difficult to get a deal approved. A broader definition that includes any retailer that sells pet supplies would make the deal easier to approve.

In September, PetSmart said it was exploring the possibility of acquiring Petco.

The two companies also explored a merger possibility in 2014, but PetSmart ruled out a deal with Petco in favor of a buyout by private equity consortium led by BC Partners Ltd. for US$8.7 billion. At the time, PetSmart was unsure a deal with Petco would receive antitrust clearance.

In August 2015, Petco filed for an initial public offering of stock that could value it at US$5 billion to US$6 billion, including debt. And, in early October, the company confirmed it would go public again after nine years of private ownership.

The company has filed an amended S-1 form with the US Securities and Exchange Commission, but no terms were given in the filing.

Proceeds from the offering will go to the selling stockholders instead of the company. The private equity firms that own it and other investors will retain majority voting power after the initial public offering.

Petco: PetSmart-Petco merger talks stall on antitrust risk

Merger talks between Phoenix-based PetSmart Inc. and San Diego-based Petco have stalled because of disagreements over antitrust risks. Reuters reported late last week that the two pet supply retailers still are keen on clinching a deal but Petco nixed a proposal to compensate PetSmart if federal antitrust regulators end up asking for excessive store closures before blessing any deal.