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UPDATE: PetSmart To Sell Itself To BC Partners-Led Consortium for $8.7B

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PetSmart, Inc. (NASDAQ: PETM) today announced that it has entered into a definitive agreement to be acquired by a consortium led by BC Partners, Inc. at a price of $83.00 per share in cash, representing a premium of approximately 39% over PetSmart's unaffected closing share price on July 2, 2014. The consortium includes Funds advised by BC Partners (“the BC Funds”), alongside several of its limited partners, including La Caisse de dépôt et placement du Québec (“La Caisse”) and StepStone. Longview Asset Management, which owns or manages approximately 9% of PetSmart's outstanding shares has committed to vote in favor of the transaction. Longview will participate in the consortium only with respect to approximately one-third of its holdings, with the balance of its holdings receiving the same $83.00 per share cash transaction consideration as PetSmart's public shareholders will receive.
The transaction would be valued at approximately $8.7 billion, representing a 9.1x multiple of PetSmart's adjusted EBITDA1 for the twelve months ending November 2, 2014.
The announcement follows a thorough review of strategic alternatives undertaken by the PetSmart Board of Directors to maximize shareholder value which began over the summer. The transaction was unanimously approved by the PetSmart Board and is subject to shareholder and regulatory approval and other customary closing conditions. The consortium has received fully committed debt financing in connection with the transaction. The transaction is expected to close in the first half of 2015.
"We are pleased to have reached this agreement with BC Partners, which maximizes value for all of our shareholders and best positions PetSmart to continue to meet the needs of pet parents," said Gregory P. Josefowicz, Chairman of PetSmart. "This transaction represents the successful conclusion of our extensive review of strategic alternatives."
“This transaction is a testament to the strength of the PetSmart brand and franchise and reflects the dedication and commitment of our 54,000 associates to serving our customers and delivering value for our company and our shareholders,“ said David K. Lenhardt, President and Chief Executive Officer. “The consortium led by BC Partners will be an excellent partner for PetSmart as we continue to implement our strategic plan to capitalize on our opportunities for growth and meet the needs of pet parents.”
“We are very pleased to add PetSmart to our portfolio of investments. PetSmart is an iconic brand and the category leader in the growing pet retail industry. We look forward to working with management to continue growing PetSmart's business and executing against its recently announced strategic initiatives,” said Raymond Svider, a Managing Partner at BC Partners.
“This is an excellent outcome for PetSmart shareholders; it delivers significant and immediate value while best positioning the company for the future,” said James A. Star, President & CEO of Longview Asset Management. “We fully support the transaction.”
J.P. Morgan Securities LLC is serving as the exclusive financial advisor to the company, and Wachtell, Lipton, Rosen & Katz is serving as the company's legal advisor. BC Partners and its consortium investors were advised by Simpson Thacher & Bartlett LLP and Ernst & Young. Longview was represented by Skadden, Arps, Slate, Meagher & Flom. Citigroup, Nomura, Jefferies, Barclays and Deutsche Bank, have underwritten the debt package to finance the acquisition.

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