Wed, Feb. 4, 12:03 PM
- FreshPet (FRPT +1.6%) and PetSmart (PETM +0.1%) trade higher following J.M. Smucker's (SJM +5.3%) entry into the pet food business through an acquisition of Big Heart Pet Brands.
- The product category has shown stronger demand from consumers than anticipated by analysts.
- PetSmart etched out an all-time high today of $82.53 - just off its buyout price of $83.
- Though FreshPet is off its IPO highs, the stock trades at a much higher sales multiple than what J.M. Smucker shelled out last night.
Dec. 20, 2014, 10:17 AM
- The S&P Retail ETF (NYSEARCA:XRT) is up 3.4% over the last month to outpace the S&P 500 Index as consumer spending trends improve. Analysts have honed in on some categories which show some promise for growth.
- Drugstores: The transition by the sector into more health/wellness services sets it up for new growth channels. CVS Health (NYSE:CVS) reported strong comparable-store sales despite the full tobacco exit, while Rite Aid (NYSE:RAD) is prepping for a roll-out of RediClinics and HealthSpot kiosks. The visibility on Walgreen (NYSE:WAG) is somewhat clouded by the giant Alliance Boots integration, although it's ahead of rivals on the tech front with its rewards program, pharmacy app and developing online doctor concept.
- Athleisure: There's some gender initiatives going on in the athletic apparel sector with Under Armour (NYSE:UA) and Nike (NYSE:NKE) growing their women's business and Lululemon (NASDAQ:LULU) expanding on the men's side. All three companies have been closely on-trend with their assortment in a category with explosive demand. Importantly, pricing has held up this holiday season in the U.S., note retail watchers.
- Online replenishing: Fresh research into shopping trends indicates certain categories see continued buying through the online channel as consumers become attuned to a brand. Retailers positioned well to see more gains from the trend include Williams-Sonoma (NYSE:WSM), Ulta Beauty (NASDAQ:ULTA), Staples (NASDAQ:SPLS), Office Depot (NASDAQ:ODP), Sephora (OTCPK:LVMHF), Dick's Sporting Goods (NYSE:DKS), and of course Amazon (NASDAQ:AMZN).
- P-E buyouts: There are plenty of candidates in the retail sector for a leveraged buyout similar to the action that helped propel shares of PetSmart (NASDAQ:PETM) +40% from their lows. Keep an eye on Abercrombie & Fitch (NYSE:ANF), Aeropostale (NYSE:ARO), and Ann (NYSE:ANN).
Dec. 15, 2014, 8:14 AM
- Several investment firms think that a higher buyout offer on PetSmart (NASDAQ:PETM) is unlikely.
- SA contributor Apus Investments predicts PetSmart shareholders will approve the deal with Longview Asset Management already pledging its 9% block in favor of the transaction.
- PetSmart is the target of an investigation by a class action law firm over the slim premium (compared to Friday's closing price) it agreed to in its announced takeover.
- PETM +4.3% premarket to $81.00 - still below the deal price of $83 per share.
Dec. 14, 2014, 4:16 PM
- PetSmart (NASDAQ:PETM) has agreed to be bought by a BC Partners-led group for $8.7B, or $83/share, in the largest private-equity buyout of 2014.
- The price is 39% higher than PETM's "unaffected" closing share price on July 2, 2014.
- $8.7B is a 9.1x multiple on PETM's adjusted 12-month Ebitda.
- BC edged out rival buyout firm Apollo Global Management (NYSE:APO) in the auction.
- Underwriters: Citigroup, Nomura, Jefferies, Barclays and Deutsche Bank, have underwritten the debt package to finance the acquisition.
- Previously: Apollo Global closes in on $8B PetSmart buyout (Dec. 13), Banking issues cloud PetSmart buyout (Dec. 8)
Dec. 13, 2014, 2:16 PM
- Leon Black’s Apollo Global Management (NYSE:APO) appears to have edged out KKR (NYSE:KKR) in the final round of bidding for PetSmart (NASDAQ:PETM), NY Post says.
- A deal could be announced as soon as this weekend.
- Banks led by Barclays and Citi are arranging $6.25B in debt financing, which is more than 6.5x PETM's Ebitda, exceeding the Fed's guideline of 6x Ebitda. Sources say at least two more banks dropped out of the running in recent weeks after being warned by the Fed and the OCC about taking on excess leverage.
- Previously: Banking issues cloud PetSmart buyout (Dec. 8), Report: Banker anxiety could derail PetSmart buyout (Dec. 5), P-E firms circle around PetSmart (Dec. 3)
Dec. 8, 2014, 7:21 AM
- The auction deadline for PetSmart (NASDAQ:PETM) is extended into the middle part of this week as potential lenders weigh regulatory issues.
- Th sticking point for bankers is a new guideline which labels loans "special mention" if a company can't repay all the senior debt from free cash flow or half its debt within 5 to 7 years.
Dec. 5, 2014, 12:27 PM| Comment!
Dec. 3, 2014, 9:35 AM| 3 Comments
Nov. 25, 2014, 1:04 PM
- Wedbush Securities thinks the latest developments at PetSmart (PETM +0.3%) give very limited upside potential for investors and a downside to below the $70 level.
- A serious game of cat-and-mouse is currently underway between management and potential P-E buyers with PetSmart's recent cost-cutting plan a big part of the equation in handicapping a deal, notes the investment firm.
- The wildcard in the mix is still Petco, although Wedbush rates a mega-merger in the pet supply store sector as less likely now.
Nov. 20, 2014, 5:47 PM
- Jana Partners has lined up five potential nominees to serve as directors on PetSmart's (NASDAQ:PETM) board if it is not satisfied with the outcome of the pet food retailer's strategic review, according to an SEC filing.
- If it opts to run a proxy contest, Jana may nominate former CEOs Mac Crawford of Caremark, Julian Day of RadioShack and Thomas Dickson of Harris Teeter, as well as former Wal-mart exec Lawrence Jackson and One Kings Lane co-founder Susan Feldman.
- PETM began exploring a sale this summer amid pressure from shareholders including 9.8% owner Jana and Longview Asset Management.
Nov. 19, 2014, 10:21 AM
- An acquisition of PetSmart (PETM +4.1%) by KKR and Clayton, Dubilier & Rice is more likely if the company manages to push through its $200M cost-cutting plan, reasons Wedbush.
- Despite some concerns on PetSmart's weak gross margin rate and high level of inventory, Wedbush assigns a price target of $80 to PETM as a takeover premium.
- BofA also has a $80 price target on the stock, although it likes the prospect of a PetSmart-Petco merger better than the P-E play.
- UBS is more PETM)+Q3+Report%3B+Boosts+PT+to+$77/10030390.html" target="_blank">cautious with a $77 price target and tepid Neutral rating on PetSmart, noting the Q3 traffic decline of 2.4% was a concern.
- Analyst Michael Lasser leans to the apprehensive side: "As we see it, the situation is becoming fascinating, but less analyzable."
- Previously: Q3 results, Q3 highlights, P-E firms eyeing PetSmart
Nov. 19, 2014, 2:06 AM
- As the auction for PetSmart (NASDAQ:PETM) heats up, buyout firms KKR (NYSE:KKR) and Clayton, Dubilier & Rice have teamed up to take the pet food retailer private for more than $7.5B, Reuters reports.
- Petsmart, which reported a FQ3 beat after the bell yesterday, said in August it would explore a potential sale amid pressure from Jana Partners and other activist investors.
- KKR and CD&R are planning to submit a joint bid next month. Apollo Global Management (NYSE:APO) and BC Partners are also considering offers.
- PETM +2.6% AH
Nov. 18, 2014, 7:03 PM
- PetSmart (NASDAQ:PETM) is guiding for FQ4 EPS of $1.34-$1.38 vs. a $1.37 consensus.
- Comparable store sales were flat Y/Y in FQ3 - average ticket rose 2.4%, but comparable transactions fell by 2.4%. Comparable sales growth is expected to be "slightly positive" in FQ4.
- Merchandise sales were 88.2% of revenue, services 11.2%, and everything else 0.6%. Gross margin fell 40 bps Y/Y to 29.4%. Opex was 20.8% of revenue, even with a year ago.
- PetSmart expects its restructuring program (previous) to yield $200M/year in pre-tax savings by 2016.
- FQ3 results, PR
Nov. 18, 2014, 5:17 PM
Nov. 17, 2014, 5:35 PM
Nov. 17, 2014, 2:12 PM
- Wedbush Securities doesn't think PetSmart (PETM +0.3%) will issue any material update on its sale process when it releases earnings later this week.
- It's noted that P-E bidders have until December 4 to submit an offer.
- The investment firm, which forecasts an in-line Q3 from the retailer, sees some downward risk for PETM shares with the LBO math not quite working out.
PETM vs. ETF Alternatives
PetSmart Inc provides specialty products, services and solutions for the lifetime needs of pets in North America. It offers products for all the life stages of pets, professional grooming, training, day camp for dogs and boarding.
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