Tractor Supply Company, a rural lifestyle retail store chain, acquired 100% of Petsense, LLC, a specialty retailer of pet supplies and services with 136 stores in 25 states. The transaction price was approximately US$116 million.
Petsense will operate as a subsidiary of Tractor Supply Company from Petsense's current headquarters in Scottsdale, Arizona and will continue to be led by members of Petsense's senior management team. Tractor Supply plans to continue to grow the Petsense store base at a target rate of 15% to 20% annually and will convert its two existing HomeTown Pet stores to Petsense stores.
"We are excited about the addition of Petsense to the Tractor Supply family as we develop our pet specialty retail business,” Greg Sandfort, Tractor Supply Company's chief executive officer, said in a press release. “The pet industry represents a $60 billion market driven by favorable pet ownership trends and the continued humanization of pets by their owners. We believe the pet specialty industry is an attractive expansion opportunity and, with 136 stores across 25 states, we think Petsense is an excellent complement to our Tractor Supply retail operations."
"With Tractor Supply's success in the pet category and the knowledge gained from our HomeTown Pet stores, we determined that the acquisition of an established, successful concept with a proven track record of growth would be the best way to capitalize on the opportunities in the pet market. We believe the Petsense team's expertise in growing smaller format pet specialty stores combined with our proven expertise in the category as well as site selection and store growth, will enable us to accelerate the growth of our pet specialty retail business and enhance long-term shareholder value."
The acquisition was a cash transaction financed with cash-on-hand and revolver debt. The transaction, including transaction and integration costs, is not expected to be material to Tractor Supply's net earnings per diluted share for fiscal 2016.
While cat trends continue, the pandemic has added to overall slow-growth treatment of the cat food market.
Premiumization and humanization, as well as automation, fueled continued operation growth in spite of the COVID-19 pandemic.