PetSmart is in early talks to acquire Petco Holdings in a merger that could build a company that would account for 30% of pet specialty stores in the U.S., according to a report from Reuters. In 2014, PetSmart sold itself to a consortium led by investment firm BC partners for approximately $8.7 billion, ruling out an earlier deal with Petco due to potential antitrust issues.
The negotiations are not public, and neither party has commented on the merger discussions.
PetSmart and Petco are the two largest pet store chains in the U.S., and account for more than 50% of the U.S. pet store industry’s revenue, according to research firm IBISWorld. PetSmart has 38.6% of the industry’s market share, while Petco holds 18.8%.
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Petco’s private equity owners, TPG Capital and Leonard Green & Partners, registered the company for an IPO in August that could place its value as high as $6 billion. The two owners also are exploring an outright sale of Petco, with potential suitors including private equity firms Apollo Global Management, Bain Capital and KKR.
