Best in Show: PetSmart Agrees to BC Partners’ $8.7B Buyout

by John Nelson

PHOENIX AND NEW YORK — PetSmart Inc. (NASDAQ: PETM) has entered into a definitive agreement to be acquired by a consortium led by BC Partners Inc. for $83 per share in cash, or $8.7 billion. The consortium includes funds advised by BC Partners, alongside several of its limited partners, including La Caisse de dépôt et placement du Québec and StepStone. Citigroup, Nomura, Jefferies, Barclays and Deutsche Bank have underwritten the debt package to finance the acquisition.

“This transaction is a testament to the strength of the PetSmart brand and franchise and reflects the dedication and commitment of our 54,000 associates to serving our customers and delivering value for our company and our shareholders,“ says David Lenhardt, president and CEO.

“This transaction represents the successful conclusion of our extensive review of strategic alternatives,” adds Gregory Josefowicz, chairman of PetSmart.

The transaction was unanimously approved by PetSmart’s board of directors and is subject to shareholder and regulatory approval and other customary closing conditions. The consortium has received fully committed debt financing in connection with the transaction.

The transaction is expected to close in the first half of 2015, upon which PetSmart will go from a public company traded on the NASDAQ to a private company.

“We are very pleased to add PetSmart to our portfolio of investments. PetSmart is an iconic brand and the category leader in the growing pet retail industry,” says Raymond Svider, a managing partner at BC Partners.

Longview Asset Management, which owns or manages approximately 9 percent of PetSmart’s outstanding shares, has committed to vote in favor of the transaction. Longview will participate in the consortium only with respect to approximately one-third of its holdings, with the balance of its holdings receiving the same $83 per share cash transaction consideration as PetSmart’s public shareholders will receive.

“This is an excellent outcome for PetSmart shareholders; it delivers significant and immediate value while best positioning the company for the future,” says James Star, president and CEO of Longview Asset Management. “We fully support the transaction.”

J.P. Morgan Securities LLC is serving as the exclusive financial advisor to PetSmart, and Wachtell, Lipton, Rosen & Katz is serving as the company’s legal advisor.

Simpson Thacher & Bartlett LLP and Ernst & Young advised BC Partners and its consortium of investors. Skadden, Arps, Slate, Meagher & Flom represented Longview.

Founded in 1986 in London, BC Partners is a private equity firm specializing in corporate buyouts and acquisition financing. BC Partners has principally invested in larger businesses in Europe and select North America markets through its network of offices in London, Paris, Hamburg and New York. BC Partners is currently advising funds totaling over €12 billion (approximately $18.8 billion USD).

Phoenix-based PetSmart operates 1,387 pet stores in the United States, Canada and Puerto Rico and approximately 201 in-store PetSmart PetsHotel dog and cat boarding facilities.

PetSmart’s stock price closed Friday, Dec. 12 at $77.67 per share, up from $72.42 per share at this time last year.

— John Nelson

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