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- đ¶Petco & PetSmart - the Tale of Two PE-Backed Pet Platforms
đ¶Petco & PetSmart - the Tale of Two PE-Backed Pet Platforms
Part 1 of 2 Petco PIPE Analysis
I'm excited to kick off this two-part series on Petco, the once $6.5B pet retail darling that now trades at under $1B market cap. Part 1 will explore how Petco ended up hereâby comparing its trajectory to PetSmart, its long-time rival and fellow 2015 PE-backed buyout.
In Part 2, weâll dig into Petcoâs recent performance and walk through an illustrative PIPE investment pitch and model. Iâll also post a step-by-step video walkthrough so those interested in building out a PIPE model (essentially an LBO + preferred and warrant mechanics) can follow along. Stay tuned!
PE Playbook: Pet Retail
State of Play
Petco (NASDAQ: WOOF) has been a disaster for investors, especially for its PE-backers CVC and CPPIB. After peaking at $27.71 per share post-IPO, it now trades at ~$3 per shareâa 90%+ drawdown, implying a market cap of ~$950 million.
And with CVC now investing out of Fund 9, Petco (which was invested out of Fund 6) has become an orphan asset despite CVC being the controlling shareholder.
In part 1, letâs explore how Petco ended up here and compare its strategy to PetSmart, which was acquired by BC Partners around the same time in 2015, and unlike Petco, returned 3x+ MOIC to BC Partners thus far.
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