CVC, Canada Pension Plan to Buy Petco for About $4.6 Billion

  • Firms beat joint KKR and Hellman offer, as well as Apollo bid
  • Owners TPG, Leonard Green said to score a 350 percent profit

CVC Capital Partners and the Canadian Pension Plan Investment Board agreed to buy Petco Animal Supplies Inc. in a deal worth about $4.6 billion.

The firms will acquire Petco from TPG Capital and Leonard Green & Partners in a transaction likely to close early next year, according to a statement Monday. They beat a joint offer from buyout firms KKR & Co. 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 pet-supplies retailer 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 Fort Worth, Texas-based private equity firm 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.

Petco hired advisers earlier this year to explore options including a sale or taking the company public, people familiar with the matter have said. The company filed in August with the U.S. Securities and Exchange for an initial public offering.

Spokesmen for TPG declined to comment, while representatives for Petco and Leonard Green didn’t respond to telephone requests seeking comment.

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