PetSmart To Buy Online Pet Food Retailer Chewy
Chewy to continue current online business
News broke today that giant pet food retailer PetSmart has entered into a definitive agreement to acquire Chewy, Inc., the popular online pet food and products retailer. The acquisition, subject to normal regulatory approvals, is anticipated to close by the end of PetSmart’s second fiscal quarter in 2017.
Once the deal is finalized, Chewy will continue to be led by its current CEO, Ryan Cohen, and operate as a largely independent subsidiary of PetSmart. Chewy is expected to continue focusing on its current online business strategy. PetSmart is expected to continue with its own strategic initiatives for the combined organization. Both companies will use their shared innovative capabilities and offerings in order to deliver the most value and convenience to customers.
According to Michael Massey, president and CEO of PetSmart, “PetSmart strives to be the trusted partner to pet parents and pets in every moment of their lives. We are focused on improving our customers’ experience in-store and online as we continue to execute against our long-term strategic initiatives. Chewy’s high-touch customer e-commerce service model and culture centered around a love of pets is the ideal complement to PetSmart’s store footprint and diverse offerings. Together, PetSmart and Chewy will provide the most convenient customer experience to a wider base of pet parents across every channel.”
Chewy a leader in online pet food sales
Chewy has been a leading pet food retailer since it was founded by Ryan Cohen and Michael Day in 2011. The company has seen significant growth during the past six years. Considered to be an under-penetrated market, Chewy has been able to attract and retain a large, loyal customer base eager to purchase pet food online. Chewy has excelled in offering a wide variety of pet foods, including foods from small, independent companies.
Chewy employs more than 700 people in South Florida alone and more than 4,000 total nationwide. Revenues were projected to explode past the billion-dollar mark this year as the company worked to open three new fulfillment centers during the next 18 months, bringing the company’s number of warehouses to six.
Chewy’s position in this growing online pet retail market complements PetSmart’s presence as a brick and mortar pet food retailer. PetSmart has over 1,500 stores and 55,000 associates across North America.
“Since we started Chewy, we have been dedicated to understanding and satisfying the evolving needs of our customers to deliver the highest quality pet products and customer service,” said Ryan Cohen, co-founder and CEO of Chewy. “Combining our strong e-commerce expertise with PetSmart’s best-in-class infrastructure, footprint and breadth of offerings including services will help us ‘wow’ our customers even more.”
Financial details of the deal
Details of the deal were not made public at this time.
Financial advisors to PetSmart on this transaction were Citi and Barclays, with Simpson Thacher & Bartlett LLP acting as its legal advisor. Citigroup Global Markets Inc. and Barclays also provided committed financing for the acquisition. Equity financing is being provided by PetSmart’s existing shareholders. Financial advisor to Chewy on this transaction was Allen & Company, with Weil, Gotshal & Manges LLP acting as its legal advisor.
PetSmart has headquarters in Phoenix, Arizona. Chewy operates out of Dania Beach, Florida.
