Forum Home Page [see Broadridge note belo


The Shareholder Forumtm

support for appraised intrinsic value realization

of stock investments in

PetSmart, Inc.



AVR Status

PetSmart reported voting approval on March 6, 2015 by 74.4% of outstanding shares for the company's definitive agreement to be acquired by a consortium led by BC Partners, with the participation of existing shareholder Longview Asset Management, at a price of $83.00 per share, as presented in the company's February 2, 2015 Definitive Proxy Statement, and the merger became effective on March 11, 2015. Based on its review of suitability, the Forum will offer support of shareholders who reserved rights to consider appraisal for realization of the company's intrinsic value.


Forum distribution:

Anticipated buyout pressed by activist and supported by participating stockholder


For the referenced company announcement of the agreement, see

For an earlier version of this article as it was distributed to Forum participants, click here.


Source: Bloomberg, December 14 (updated December 15), 2014 article and video


PetSmart Will Be Acquired for $8.3 Billion by BC Partners

By David Welch | Dec 15, 2014 9:58 AM ET

What Made PetSmart 2014’s Largest LBO Worth $8.3B?
Dec. 15 (Bloomberg) -- PetSmart has agreed to be purchased by BC Partners for $8.3 billion in the biggest leveraged buyout deal for a U.S. company this year. Bloomberg’s David Welch examines the deal on “Market Makers.”

PetSmart Inc. (PETM), the largest pet-store chain in the U.S., agreed to be bought by a group led by BC Partners for about $8.3 billion in the biggest leveraged deal for an American company this year.

The group will pay $83 a share, according to a statement yesterday. That’s about 39 percent more than the company’s price on July 2, before activist investor Jana Partners began pushing for the sale. Including debt, the total value of the deal is about $8.7 billion.

BC Partners beat out other bidders, including Leon Black’s Apollo Global Management and KKR & Co., during an auction that came down to negotiations over the weekend, people with knowledge of the matter said. BC Partners struck a deal on Sunday, after making a final offer a day earlier that topped other bids, the people said, asking not to be identified because the information is private.

“It was a very competitive auction,” Raymond Svider, a managing partner at BC Partners, said in a telephone interview. “We feel fortunate.”

A spokesman for Apollo declined to comment, as did a representative for Jana and a spokeswoman for KKR. In addition to BC Partners, the consortium includes Caisse de Dépôt et Placement du Québec and StepStone.


Photographer: Victor J. Blue/Bloomberg

Parakeets displayed for sale sit on perches inside a cage at a PetSmart Inc. store in New York..


Jana Victory

The sale is a victory for investors Jana and Longview Asset Management, which both urged the retailer to sell itself as its business waned. Same-store sales at the pet-supply company were flat last quarter after falling in the previous three months for the first time in at least a decade, as competition from Inc. and other retailers intensified.

Until Jana, the $10 billion hedge fund run by Barry Rosenstein, began its campaign on July 3, PetSmart’s shares had tumbled 18 percent in 2014. Longview, which controls about 9 percent of PetSmart, said later that month it also backed a sale. Longview supports the sale to BC Partners, according to the statement.

Shares of Phoenix-based PetSmart jumped 4.7 percent to $81.30 as of 9:37 a.m. in New York. They had gained 6.8 percent this year through the end of last week, compared with an 8.3 percent gain in the Standard & Poor’s 500 Index.

Including debt, the buyout group is paying about 9.3 times PetSmart’s earnings before interest, taxes, depreciation, and amortization in the 12 months through Nov. 2, data compiled by Bloomberg show. That compares with a median of 8.9 times historic Ebitda paid in 24 buyouts of U.S. consumer companies over $1 billion in the last five years.

Gates Global

The private-equity deal tops Blackstone Group LP (BX)’s $5.4 billion purchase of industrial-products maker Gates Global LLC in July, data compiled by Bloomberg show. Buyout firms have held off on making purchases this year, as valuations climb with stock benchmarks that have reached records.

PetSmart made a good buyout candidate because of its high free-cash-flow yield -- a measure of how much cash from operations the business generates relative to its share price, analysts have said. Petco Animal Supplies Inc., a PetSmart competitor, was acquired by private-equity investors led by Leonard Green & Partners in 2006. That helped Jana make a case in July for PetSmart being a buyout target, especially given the attractive financing market.

BC Partners’ Svider said the market overreacted to slowing growth at the iconic brand, giving his firm a fortuitous opportunity to scoop it up.

“The company should never have been put in play,” he said.

To contact the reporter on this story: David Welch in New York at

To contact the editors responsible for this story: Kevin Miller at Nick Turner, Niamh Ring


©2014 Bloomberg L.P. All Rights Reserved




The project supporting investor interests in PetSmart, Inc. is being conducted by the Shareholder Forum for the benefit of Participants that have reserved Appraised Value Rights ("AVR") Managment, subject to conditions including standard Forum policies that each Participant is expected to make independent use of information obtained through the Forum and that participation is considered private unless the Participant specifically authorizes identification.

Inquiries may be sent to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.