Who Bought Petco?

In 2016, Petco, one of the leading pet specialty retailers in the U.S., was acquired by CVC Capital Partners and Canada Pension Plan Investment Board (CPPIB) in a deal worth approximately $4.6 billion. The acquisition was announced in November 2015 and completed on March 1, 2016.

Reasons Behind the Sale

The decision to sell Petco in 2006 was driven by the attraction of solid retail cash flows and real estate assets for private equity investors. The investor firms Leonard Green & Partners LP and Texas Pacific Group offered $29 per share in cash for Petco, a 45 percent premium over its closing price at the time. The deal was approved by Petco’s board and was expected to close by the fourth quarter of that year, pending shareholder and regulatory approval.

Impact on Petco’s Business Strategy

The acquisition led to several changes in Petco’s overall business strategy. Petco has focused on creating a comprehensive ecosystem for pet health and wellness, which includes products, veterinary services, grooming, training, and exclusive brands. The company has also emphasized its omnichannel capabilities, aiming to serve customers how, where, and when they want to shop.

Some of the strategic priorities that Petco has outlined include scaling its services offerings, providing pet parents with unrivaled access to general and specialized healthcare services, and leveraging its national pet care center network to enable differentiated fulfillment capabilities to meet customer needs.

Operational Changes

Since the acquisition, Petco has made several changes to its operations. In March 2022, Petco advanced its veterinary and services focus by purchasing the remaining stake in a joint venture with Thrive Pet Healthcare, which was initially formed in May 2017. In August 2022, Petco announced an evolution in its organizational design to enable the next phase of growth.

Impact on Employees

In 2020, Petco implemented pay cuts, furloughs, and reduced hours for its executive team, corporate office, and hourly employees to minimize the financial impact of COVID-19. The CEO, Ron Coughlin, decided to forego 100% of his salary, senior vice presidents’ salaries were reduced by 25%, and vice presidents’ pay was cut by 15%. Other hourly and salaried employees were subject to either reduced hours, salary reductions, or rotating furloughs from their positions. The company also eliminated 35 corporate office positions. These changes aimed to keep employees attached to the company and financially supported while protecting the long-term interests of the business.

The Future of Petco

Under its new ownership, Petco seems to be focused on expanding its services and enhancing the customer experience. Petco is investing heavily in pet services, as services have been a bright spot in retailers’ earnings reports, bringing in sustainable cash flow and giving people a reason to visit stores. One of Petco’s biggest priorities in its service business is to build out its veterinary hospital network and grow its capacity, with plans to have 300 hospitals by the end of the year and a goal of reaching 900 hospitals in the future.

In conclusion, the acquisition has allowed Petco to invest in its growth initiatives and capitalize on promising market opportunities, positioning the company as a leader in the pet health and wellness sector.