Petco Animal Supplies, which is backed by private-equity firms, is reportedly weighing going public again or a possible sale.

Petco’s owners, CVC Capital Partners and the Canada Pension Plan Investment Board, are currently interviewing potential advisers while they also explore strategic options, Bloomberg reported Wednesday. Formal efforts around an initial public offering or a sale aren’t expected to kick off until next year, the story said. A sale or IPO of Petco could value the retail chain at $6 billion, the report said.

Petco, of San Diego, currently operates more than 1,500 stores across the U.S., Mexico, and Puerto Rico. The retailer produced more than $4.4 billion in revenue for the year ended Feb. 1, Moody’s Investors Service said in an April report. CVC and CPPIB have owned Petco for more than four years. PE firms typically hold their investments for three to five years and then begin selling.

Like many retailers, Petco struggled during the Covid-19 pandemic, which caused businesses earlier this year to shut down across the U.S. Petco, which was deemed essential, remained open during the height of the pandemic. Petco’s traffic was expected to remain weak as the retailer faced increased competition from rivals like Chewy (Ticker: CHWY), as well as and Walmart, Moody’s said.

Chewy, which is owned by PetSmart, went public last year, raising more than $1 billion. (PetSmart, which is backed by BC Partners, has 73.8% of Chewy’s voting power, according to a May 26 Securities and Exchange Commission filing.)

Petco is no stranger to going public. If it seeks an IPO, this would be the third time it would tap the equity markets.

Founded in 1965 as a mail-order veterinary supplies business, Petco first went public in 1994, according to its website. The San Diego company, at the time, had 218 stores in 13 states and $189 million in sales. In 2000, the PE firms TPG and Leonard Green acquired Petco, taking it private in a $600 million deal. Petco went public for a second time in 2002. At that time, the retailer had 600 stores in 48 states. Four years later, in 2006, TPG and Green bought Petco for a second time, again taking it private in a $1.7 billion deal. It had 800 stores in 49 states. In early 2016, TPG and Green sold Petco to CVC and CPPIB for $4.6 billion.

Source: Barrons

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