Petco Eyes IPO Or Sale At $6B Valuation

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The owners of Petco are exploring a buyout of the pet retail store that could net as much as $6 billion, according to Bloomberg.

Bloomberg’s anonymous sources have said the owners, CVC Capital Partners and Canada Pension Plan Investment Board, are looking into potential advisors and strategic options, with formal efforts at a sale or initial public offering (IPO) expected to come sometime next year.

But the owners might just decide not to sell at all and keep the company. They acquired Petco in 2016 for $4.6 billion from TPG and Leonard Green, according to Bloomberg.

Petco has faced the usual disruptions of the pandemic as consumers cut spending and physical store visits. The company has also grappled with rising competition, with its stock falling as Moody’s downgraded its corporate family rating and possibility of falling into junk status last April, Bloomberg reported.

Other alternatives, such as PetSmart-backed Chewy and online eCommerce giants like Amazon and Walmart, have also encroached on Petco’s territory, despite its presence in the market with almost 1,500 stores in the U.S., Puerto Rico and Mexico.

The company is currently led by CEO Ron Coughlin, and some stores offer other services like pet care services, vaccinations, veterinary health advice and a digital health service called PetCoach, Bloomberg reported.

A Petco loan maturing in 2023 rose around 3 cents on the dollar, hitting around 90 cents, after the news of the possible sale, sources told Bloomberg.

In March, the pandemic caused an uptick in pet food sales, PYMNTS reported. Most of that was from “panic buying” as people bought essentials en masse as they anticipated long lockdown periods and unprecedented conditions, which also included necessities like toilet paper and hand sanitizer. Dog food sales shot up 54 percent and cat food was up 52 percent, according to statistics from Nielsen.

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