PetSmart buys Chewy:
Acquisition fits in with expansion strategy
Phoenix-based PetSmart agrees to acquire Chewy, an online retailer of pet food and other products, in a transaction that will extend PetSmart’s capability and reach, allowing it to offer a wider selection of products and services.
Phoenix-based PetSmart said it has agreed to acquire Chewy, an online retailer of pet food and other products in a transaction that will extend PetSmart’s capability and reach, allowing it to offer a wider selection of products and services. The purchase price wasn’t disclosed.
PetSmart is reportedly paying around $3.35 billion for the company, according to Paul Cuatrecasas, CEO of Aquaa Partners, a London-based firm that provides mergers and acquisitions advice to companies in technology and other industries.
In a note to The Republic, Cuatrecasas said that would be “a comparatively cheap price to pay if it means that PetSmart can safeguard its market position, stave off decline and disruption, and even drive a new generation of growth — especially at a time when so many negative headwinds are hitting bricks-andmortar retailers.”
He termed the transaction a “huge and visionary deal” that indicates “PetSmart is clearly thinking five, 10 or even 20 years into the future.”
In a statement, Michael Massey, PetSmart’s president and CEO, cited Chewy’s “high-touch customer e-commerce” and pet-focused culture shared by its 5,000 employees. “Together, PetSmart and Chewy will provide the most convenient customer experience to a wider base of pet parents across every channel,” he said. Chewy features oneand two-day shipping across the nation.
Chewy’s position in the online pet-retail segment complements PetSmart’s footprint in physical stores. PetSmart has more than 55,000 employees at more than 1,500 stores across North America.
According to Cuatrecasas, PetSmart is getting a cutting-edge technology company with a large customer base. “Chewy.com has made a name for itself as a customer-first company through marketing stunts like free pet gifts and handwritten notes.”
If PetSmart can assimilate Chewy and its culture, know-how and capability, the transaction could become a prime example of how to acquire a tech company, Cuatrecasas added. “This deal also demonstrates the ferocity of the competition now taking place between traditional high-street brands racing to acquire technology companies,” he said.
Chewy, based in Dania Beach, Florida, will operate as a PetSmart subsidiary. Chewy operates fulfillment centers in Indiana, Nevada, Pennsylvania and Texas, with a Florida facility coming.