CVC and CPPIB to acquire Petco for $4.6bn

CVC Capital Partners and the Canada Pension Plan Investment Board (CPPIB) are jointly acquiring US pet retailer Petco Animal Supplies for about $4.6 billion.

CPPIB head of direct private equity Shane Feeney said in a statement that the investment “aligns well with CPPIB’s strategy to invest in leading retail businesses with strong omnichannel capabilities.”

CVC is making the investment from CVC Capital Partners VI, a 2013-vintage vehicle that raised €10.5 billion. CVC is also currently investing its CVC Growth Partners Fund, a $683 million vehicle, and CVC Asia Pacific Fund IV, which closed on $3.5 billion, a source told Private Equity International.

The deal, expected to close in early 2016, involves a group of sellers led by TPG and Leonard Green & Partners.
Petco, founded as UPCO in 1965, was taken private in 2000 through a leveraged buyout led by Leonard Green and TPG. Two years later, they listed the company and took it private again in 2006 for more than $1.7 billion, according to reports.

The Petco transaction follows the $8.7 billion acquisition of PetSmart at the end of last year by a consortium including Canadian pension fund CDPQ led by BC Partners, as reported by PEI.

Goldman, Sachs & Co and JP Morgan Securities are Petco’s financial advisors and Ropes & Gray are Petco’s legal advisor. Barclays, Citigroup and Moelis are CVC and CPPIB’s lead financial advisors. Barclays, Citigroup, Royal Bank of Canada, Credit Suisse, Nomura and Macquarie provided committed debt financing and Gibson Dunn provided legal advising to the buyers. CPPIB also received separate advising from Torys.

Earlier this year, CVC Asia exited a large portion of its investment in Hong Kong Broadband Network (HKBN) in a transaction that included the purchase of $200 million’s worth of shares by CPPIB, as reported by PEI.

CPPIB currently manages C$268.6 billion ($201.03 billion; €189.41 billion), according to PEI Research.