Petsmart, Inc. is an American retail chain operating in the United States, Canada, and Puerto Rico that specializes in the sale of pet supplies and services such as dog grooming and dog training. On April 18, 2017, Petsmart announced that it would be acquired by Chewy, Inc. for $3.35 billion.
Petsmart’s decision to sell to Chewy was likely driven by a number of factors. First, Petsmart was facing increased competition from online retailers such as Amazon.com, which was eating into its market share.
Second, Petsmart was saddled with a large debt load, and selling to Chewy allowed it to pay down this debt and improve its financial position. Finally, Petsmart likely saw an opportunity to capitalize on the growing trend of pet owners spending more on their pets.
The $3.35 billion price tag Chewy paid for Petsmart represented a premium of nearly 60% over Petsmart’s market value at the time of the announcement. This premium reflects the value that Chewy placed on Petsmart’s brand, customer base, and store locations. Chewy likely believes that it can grow Petsmart’s business by leveraging its own e-commerce expertise and scale.
