Petco Is Said to Plan a Sale or Initial Offering

Petco, held by private-equity firm CVC and Canada Pension Plan Investment Board, is reportedly exploring a sale or IPO.
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Retail chain Petco Animal Supplies is in preliminary talks to sell itself or go public, a media report says.

The chain's owners, private-equity firm CVC Capital Partners and Canada Pension Plan Investment Board, are exploring a sale or initial public offering of the San Diego, company, sources told Bloomberg News.

The offering could value the pet retailer at $6 billion, including debt.

Petco, led by Chief Executive Ron Coughlin, operates more than 1,500 stores across the U.S., Puerto Rico and Mexico, according to its website. 

Some stores offer pet-care services, veterinary advice and vaccination clinics, and the company also has a digital health service known as PetCoach.

Petco has grappled with challenges including rising competition from rivals like PetSmart and its online subsidiary Chewy  (CHWY) - Get Report, both controlled by the PE firm BC Partners; PetMed Express  (PETS) - Get Report, and online-retail giant Amazon  (AMZN) - Get Report

Declines in consumer spending amid the coronavirus pandemic have added to the effort. 

Moody’s Investors Service in April downgraded Petco’s corporate family rating and probability of default rating, citing a tough competitive landscape despite the chain’s substantial market presence.

CVC and the Canadian pension fund acquired Petco for $4.6 billion from PE firms TPG and Leonard Green in 2016, a decade after those two firms took Petco private, Bloomberg reported.

In 2019, $95.7 billion was spent on pets in the U.S., according to the American Pet Products Association. 

PetSmart and the food-delivery company Doordash today said they partnered to provide same-day delivery of pet products in more than 1,400 stores.

In July, a group of employees at PetSmart asked BC Partners for things like hazard pay, better protective equipment, and guaranteed health coverage to shield them from the impact of the coronavirus pandemic, The Wall Street Journal reported.