Listen to this article
PetSmart is looking for a leg up on the dog-eat-dog retail industry.
The US-based company is buying Chewy.com, an online pet retailer, in a bid to complement its brick-and-mortar presence with expanded digital offerings to capture a larger slice of the lucrative market for pet products.
Petsmart did not disclose any financial details for the deal. However, according to tech news website Recode, which cited multiple people familiar with the transaction, the US company will pay $3.35bn for Chewy.com, That price tag would top the $3bn that American super-store chain Walmart paid for Jet.com as it took aim at Amazon.com’s e-commerce dominance.
It is also a sizable deal for Petsmart, which itself was bought out by BC Partners for $8.7bn in 2014.
The deal, which is subject to regulatory approval, is expected to close by the end of PetSmart’s second fiscal quarter of 2017, according to the company. When finalised, Chewy.com will continue to operate largely as an independent subsidiary under the leadership of its chief executive Ryan Cohen, who co-founded the site in 2011.
Michael Massey, president and chief executive of PetSmart, said in a statement:
“We are focused on improving our customers’ experience in-store and online as we continue to execute against our long-term strategic initiatives. Chewy’s high-touch customer e-commerce service model and culture centered around a love of pets is the ideal complement to PetSmart’s store footprint and diverse offerings. Together, PetSmart and Chewy will provide the most convenient customer experience to a wider base of pet parents across every channel.”
PetSmart operates about 1,500 pet stores in the US, Canada and Puerto Rico, along with more than 200 in-store dog and cat boarding facilities. Chewy, which has its headquarters in Florida, employs about 5,000 people and operates fulfillment centres in several US states.
Citi and Barclays served as financial advisors to PetSmart on the deal, while Simpson Thacher & Bartlett acted as its legal advisors. Citigroup Global Markets and Barclays provided committed financing for the deal, with equity financing being posted by PetSmart’s current shareholders. Allen & Co was Chewy’s financial advisor, and Weil Gotshal & Manges acted as legal advisors.