Jana Partners Sells PetSmart, Inc. (PETM) Stake

Jana Partners Sells PetSmart, Inc. (PETM) Stake
Image source: Bloomberg Video Screenshot

PetSmart recently announced that its comparable store sales rose 2.6% in the fourth quarter

Jana Partners, the activist hedge fund headed by Barry Rosenstein sold out its stake in PetSmart based on its 13D filing with the Securities and Exchange Commission (SEC).

The activist hedge fund previously owned 9.8% stake in PetSmart. Jana Partners started selling its shares last January, and eventually sold all of its stockholdings in the company last week.

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Jana Partners wins activist campaign at PetSmart

Jana Partners exited its position in PetSmart after succeeding in urging the company to explore strategic alternatives including a sale.

In July, last year, the activist hedge fund warned the management of the company regarding a leveraged recapitalization, and emphasized that a sale “very likely offers the highest risk-adjusted return for shareholders.” At the time, Jana Partners said PetSmart was suffering a chronic underperformance.

PetSmart eventually sold itself to a consortium led by BC Partners for $83 per share or $8.7 billion last December. The total value of the transaction was 9.1X multiple to the company’s adjusted EBITDA for the year ending November 2, 2014.

PetSmart Chairman Gregory Josefowicz said the deal with BC Partners was the result of an extensive review of strategic alternatives. He believes that the deal would maximize value for shareholders, and would also put PetSmart in the best position to meet the needs of its customers.

PetSmart scheduled a special meeting of shareholders to consider and vote on the transaction on March 6, 2015.

PetSmart preliminary 4Q results

Yesterday, PetSmart released select preliminary results for the fourth quarter of 2014. According to the company, its comparable store sales rose 2.6%. The company also expects to meet or beat its previous non-GAAP earnings guidance of around $1.34 to $1.38 per share for the quarter.

PetSmart will release its official results for the fourth quarter and full year 2014 before the market opens on March 4.

The shares of PetSmart are trading $82.51 per share around 12:37 in the afternoon in New York. Over the past 52-weeks, the company’s stock price went up from $55 to $82.68 per share. The stock gained more than 27% over the past year.

Firt Call Corporation, a division of Thomson Reuters recently recommended a Hold rating for the shares of PetSmart.

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