Canadian Pension Plan sniffs out new opportunity

The CPP’s investment board may just have gone to the dogs, with a buy that signals the strength of the pet product industry

Petco is near an agreement to be acquired by CVC Capital Partners and the Canadian Pension Plan Investment Board for $4.7 billion, a person briefed on the matter said on Sunday.

The deal is likely to be announced on Monday, said the person, who spoke on the condition of anonymity because the discussions were still private.

Petco, which sells food and supplies for pets in more than 1,400 stores throughout the United States, has been bought and sold by TPG Capital and Leonard Green & Partners twice. The first time was in 2000, when they acquired the retailer for $600 million, and then took it public two years later. Then, they bought it back in 2006 for $1.68 billion.

Petco Holdings, based in San Diego, filed to go public in August, but was simultaneously pursuing a sale. The company’s revenue had increased 12 percent in the 26 weeks through Aug. 1 from the same period a year ago, the filing showed, while net income jumped about 43 percent, according to the company’s filing. The company has more than $2 billion in debt, the filing showed.

A fellow pet supplies retailer, PetSmart, was also taken private a year ago. A consortium led by BC Partners acquired PetSmart for $8.7 billion in what became the biggest leveraged buyout of an American company in 2014.

Representatives from CVC Capital Partners, Canadian Pension Plan and Petco were not immediately available for comment. Representatives from TPG and Leonard Green declined to comment.

The deal was reported earlier by The Wall Street Journal.