Apollo Thinks it Can Turn PetSmart Around

Posted on 07/25/2023

BC Partners agreed to sell a minority stake in PetSmart, a Phoenix-based chain of pet stores, to Apollo Global Management, though will remain a majority owner along with Singapore’s GIC Private Limited. Other co-investors in PetSmart include La Caisse de dépôt et placement du Québec (CDPQ), Longview Asset Management LLC, StepStone Group, and certain other investors.

BC Partners and GIC will remain the majority shareholders of PetSmart and retain control of the board. The deal is currently expected to close in the fourth quarter of 2023, subject to closing conditions and regulatory approvals.

This is nearly a decade after Apollo tried to first acquire PetSmart.

BC Partners first invested in PetSmart in 2015, buying out the company for US$ 8.7 billion. In May 2017, PetSmart acquired Chewy, Inc. for US$ 3.35 billion and took the company public two years later. During COVID-19 times, BC Partners moved to cut employees to increase profits, drawing ire from U.S. labor groups. For example, at PetSmart, there were reports of animals dying in stories and carcasses piling up in PetSmart freezers. PetSmart benefitted great from the pandemic as remote workers started buying more pets in the U.S, thus needing to order more supplies.

In October 2020, BC Partners formally split PetSmart’s operations from that of Chewy. PetSmart’s ownership stake in Chewy was transferred to BC Partners.

For BC Partners, JP Morgan served as financial adviser and Kirkland & Ellis served as legal advisers. UBS served as financial adviser to the Apollo funds and Simpson Thatcher & Bartlett served as legal advisers.

Keywords: Caisse de depot et placement du Quebec.

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