Breaking Down The $8.2 Billion PetSmart Deal

One of the biggest specialty providers of pet products and services PetSmart, Inc. PETM has agreed to be acquired for $8.2 billion by a consortium of buyers lead by BC partners. Following this news, PetSmart shares opened gap-up Monday and made its lifetime high of $81.44.

Jim Cramer and David Faber broke down the deal on CNBC.

"This was a, not to be too pun-oriented, but it was a dog. I mean, literally it had been one of the great growth companies and it had the category to itself and then people perceived that it was losing on food -- now that’s a big business for them," Cramer said.

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"They hadn’t been able to figure out the Omni-channel, when I say omni-channel, we are talking about online. They have been selling out of their stores; their competitor Petco has been taking market-share. Petco also a private company. There had been discussions by the way to whether these two companies could get together," Faber said.

The Valuation

“The $83 number is a pretty good number," Faber added. ""I talked to a couple of shareholders this morning because I have talked to them through this period and they are quite happy with that number at $83 and the feeling is that in many ways to figure out this omni-channel strategy perhaps it will be better as a private company, to do it in that fashion rather than buying back a lot of stock, taking on debt and staying public and figuring out as they transition at this point."

Image credit: Mike Mozart, Flickr