Petco Agrees to $1.66B Private Investment Acquistion Bid

Petco Animal Supplies Inc., the nation's second biggest pet supplies retail chain, said Friday that it has agreed to be acquired for about $1.66 billion by a private investment group.

The investors Leonard Green & Partners LP and Texas Pacific Group are paying $29 per share in cash for Petco, a 45 percent premium over its closing price of $19.45 on Thursday on the Nasdaq Stock Market.

Petco shares climbed $8.55, or 44 percent, to $28 in premarket trading.

The buyers would also assume debt that Petco said would boost the total value of the deal to $1.8 billion.

Petco said its board unanimously approved the proposed deal. The transaction is expected to close by this year's fourth quarter, pending shareholder and regulatory approval.

Petco, which is second only to PetSmart Inc. (PETM) among the nation's biggest pet supply retailers, is the latest retailer to be taken out by private equity investors in recent months, who are drawn to retailers' strong cash flows and real estate assets.

Blackstone Group and Bain Capital agreed to acquire arts and crafts retailer Michaels Stores Inc. for $6 billion in June. Texas Pacific Group and another private equity player Warburg Pincus teamed up in 2005 to purchase luxury department store chain Neiman Marcus Group Inc. for $5.1 billion.