A deal has been reached for Petco Holdings Inc. to be acquired by CVC Capital Partners Ltd. and the Canada Pension Plan Investment Board (CPPIB) in a US$4.6 billion deal, sources say.
In October 2015, merger talks between rivals PetSmart Inc. and Petco stalled because of disagreements over antitrust risks. And, last week, two groups of private equity-led bidders were reported to be gearing up to bid more than US$4 billion each for Petco. The other private equity group was with KKR & Co. and Hellman & Friedman.
In August 2015, Petco filed for an initial public offering of stock that could have valued it at US$5 billion to US$6 billion, including debt. And, in early October, the company said it would go public again after nine years of private ownership. But, later, Petco’s private equity owners decided to sell the company instead of following through on the IPO.
In late 2014, PetSmart Inc. was bought by a private equity consortium led by BC Partners Ltd. for US$8.7 billion.
According to sources, CVC and CPPIB have secured more than US$3 billion in debt financing for the acquisition. Barclays, Citigroup, Royal Bank of Canada, Credit Suisse, Nomura and Macquarie have provided committed debt financing to CVC and CPPIB, the companies have said.
The two outbid other buyout firms in an auction for the company, which had been put up for sale by a group of investors led by private equity firms TPG Capital LP and Leonard Green & Partners LP.
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