PetSmart Inc., 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. That's about 39% more than PetSmart's price 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 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," said Raymond Svider, a managing partner at BC Partners. "We feel fortunate."
A spokesman for Apollo declined to comment, as did a representative for Jana Partners and a spokeswoman for KKR. In addition to BC Partners, the consortium includes Caisse de Dépôt et Placement du Québec and StepStone.
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
Until Jana, the $10-billion hedge fund run by Barry Rosenstein, began its campaign July 3, PetSmart's shares had tumbled 18% in 2014. Longview Asset Management, which controls about 9% of PetSmart, said later that month that it also backed a sale. Longview supports the sale to BC Partners, according to the statement.
Shares of Phoenix-based PetSmart jumped $3.30, or 4.2%, to $80.97. They have climbed 11% this year, compared with a 7.6% gain for the Standard & Poor's 500 index.