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 Amazon.com Inc. and other retailers intensified.
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.
The private-equity deal tops Blackstone Group's $5.4-billion purchase of industrial-products maker Gates Global 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.