TPG Capital will reap a big gain on the sale of Petco Animal Supplies to CVC Capital Partners and the Canadian Pension Plan Investment Board in a deal worth about $4.6 billion.
The firms will acquire Petco from TPG and Leonard Green & Partners in a transaction likely to close early next year, according to a statement Monday. They beat out a joint offer from buyout firms KKR and Hellman & Friedman, as well as a bid by Apollo Global Management, according to people familiar with the matter, who asked not to be identified because the information is private.
“The pet category is a growing and dynamic space within which we believe Petco is ideally positioned to further enhance its leadership position,” Chris Stadler, a managing partner at CVC, said in the statement.
The deal comes about a month after antitrust concerns reportedly scuttled merger talks with PetSmart, a larger competitor. In August, Petco had told the Securities and Exchange Commission that it was considering an initial public offering. The company reported net income of $75 million in its latest fiscal year on revenue of $4 billion.
Petco, based in San Diego, was taken private by TPG and Leonard Green in a $1.8 billion leveraged buyout in 2006. TPG invested $362 million of equity through two buyout funds, according to a confidential marketing document obtained by Bloomberg.
The private equity firm, with offices in Fort Worth and San Francisco, stands to reap about a 350 percent profit from the sale, including dividends paid by Petco in 2010 and 2012, a person familiar with the matter said. Leonard Green, whose stake is 20 percent smaller than TPG’s, will notch a comparable percentage return.
This article includes material from the San Diego Union-Tribune.