PetSmart, Inc. (NASDAQ:PETM) announced on Sunday, December 14th that it has agreed to be acquired by a group headed by BC Partners for $83.00 per share in cash. That price offers a premium of close to 39% compared to PetSmart’s closing share price on July 2, 2014. The news is a big win for activist hedge fund, JANA Partners.
More on the PetSmart deal
The group purchasing PetSmart includes several funds advised by BC Partners, as well as several limited partners, including La Caisse de dépôt et placement du Québec and StepStone.
Longview Asset Management, which controls around 9% of PetSmart’s outstanding shares will vote vote in favor of the transaction. Of note, Longview is only particiapting in the group with approximately one-third of its share holdings. The remaining two-thirds of its holdings will be paid the $83.00 per share cash transaction price that PetSmart’s public shareholders will receive.
The total value of the deal comes out to around $8.7 billion, a 9.1X multiple to PetSmart’s adjusted EBITDA for the year ending November 2, 2014.
The deal with BC Partners follows a comprehensive review of strategic alternatives undertaken by the PetSmart BoD in order to maximize shareholder value. The deal has been unanimously approved by the PetSmart, Inc. (NASDAQ:PETM) board, but still must meet shareholder and regulatory approval and other customary closing conditions. The BCPartners group has fully committed debt financing lined up to fund the transaction. The deal is anticipated to be finalized by the first half of 2015.
Statement from PetSmart execs
“We are pleased to have reached this agreement with BC Partners, which maximizes value for all of our shareholders and best positions PetSmart to continue to meet the needs of pet parents,” commented Gregory P. Josefowicz, Chairman of the Board of PetSmart. “This transaction represents the successful conclusion of our extensive review of strategic alternatives.”
“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,“ noted David K. Lenhardt, President and CEO. “The consortium led by BC Partners will be an excellent partner for PetSmart as we continue to implement our strategic plan to capitalize on our opportunities for growth and meet the needs of pet parents.”