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Private equity’s PetSmart maneuver

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The year’s biggest buyout deal went down today  not in cable TV or a mobile app or a Chinese brand, but in the pet business.

Private-equity firm BC Partners and investment partners purchased PetSmart for $8.7 billion. Analysts say the deal suggests brick-and-mortar PetSmart outlets have a decent financial pulse, despite the onslaught of online competition. Some items, say a hefty 30-pound pack of Iams Minichunks, sell better in stores than online.

This deal came about due to a confluence of several factors: an aggressive PetSmart shareholder agitating for a sale, the company’s willingness to cut expenses, and BC Partners’ ability to  borrow sufficient capital, given PetSmart’s low debt and secure cash flow.

 

 

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