KKR sale knocks Pets at Home shares

The Daily Telegraph - Business - - Business - TOM REES MAR­KET RE­PORT

PETS at Home’s top share­holder halved its stake in the pets su­per­store yes­ter­day, after a rally in the re­tailer’s shares gave its former pri­vate eq­uity owner an op­por­tu­nity to cash in.

Kohlberg Kravis Roberts sold a 12.2pc stake in Pets at Home for 195p a share, gen­er­at­ing £119m to mark an­other step in its exit from the re­tailer.

Since drop­ping to its low­est ever share price in June, Pets at Home has re­bounded 41pc as in­vestors were left purring by an uptick in sales boosted by a new lower pric­ing strat­egy. KKR’s stake in the £1bn firm, which stood at about 47pc after its IPO in 2014, has now dropped to ap­prox­i­mately 12.4pc. This stake will now be sub­ject to a 60 day lock-in pe­riod, dur­ing which it can­not sell any of the stock.

KKR bought the com­pany seven years ago from pri­vate eq­uity peer Bridge­point for £955m, but the sale knocked the City’s con­fi­dence in the firm, send­ing it slid­ing 16.7p to 199.2p, a 7.7pc slump.

Else­where, US pharma gi­ant Pfizer’s an­nounce­ment that it will shed parts or all of its con­sumer health­care di­vi­sion through ei­ther a sale or spin-off boosted con­sumer goods multi­na­tional Reckitt Benckiser on hopes that it could mount a bid for the un­wanted as­sets.

A deal would fill two of Reckitt’s key “white­spaces in health”, US anal­gesics and di­ges­tive reme­dies, Beren­berg an­a­lyst Rosie Ed­wards told clients, adding that a deal for the unit would be val­ued at be­tween £10bn-13bn and boost earn­ings by up to 10pc.

Other pharma firms, such as Glax­oSmithK­line, could hold a bet­ter hand in any bid­ding bat­tle by hav­ing pharma as­sets to swap with Pfizer but a deal in­volv­ing Reckitt was still “achiev­able”, she added.

Reckitt’s boss said in 2015 that he would be “very in­ter­ested” in the unit if Pfizer put up a “for sale” sign but the FTSE 100 firm’s re­cent ac­qui­si­tion of Mead John­son has led to doubts over whether the firm has the fi­nan­cial mus­cle to swoop again.

Reckitt’s 152p climb to £70.90 was trumped on the FTSE 100, how­ever, by lux­ury fash­ion house Burberry, ad­vanc­ing 40p to £18.43 after French high-end peer LVMH smashed ex­pec­ta­tions to lift the en­tire sec­tor, and house­builder Per­sim­mon jump­ing 63p to £27.61 after a rat­ings up­grade from Red­burn. Out­per­form­ing its peers on the Con­ti­nent, the wider blue-chip in­dex closed 30.38 points higher at 7,538.27.

Cen­trica chair­man Rick Haythorn­th­waite sig­nalling his con­fi­dence in the firm by buy­ing £173,100 shares pushed the Bri­tish Gas owner up 3.3p to 176.1p.

Chief ex­ec­u­tive Iain Conn also upped his stake the day be­fore to lit­tle mar­ket re­ac­tion but the en­ergy provider’s board dou­bling down on its sen­ti­ment-boost­ing direc­tor deal­ings was cheered by in­vestors ahead of the Govern­ment’s en­ergy price cap pro­posal due to­mor­row, which will po­ten­tially hit Cen­trica’s earn­ings.

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