PetSmart acquiring Chewy for $3.35 billion; Where will that leave Pet360?

Tom Paine

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PetSmart is acquiring Florida-based Chewy.com for $3.35 billion in the largest e-commerce acquisition ever. Notably $50 million more than Walmart's acquisition of Jet.com.

PetSmart made a relatively small bet on ecommerce when it bought Plymouth Meeting-based Pet360 for $130 million plus incentives less than three years ago. This is obviously a much bigger bet.

Pet360 still has a fair number of people in Plymouth Meeting; it will be interesting to see how they fare.

PetSmart's release on the Chewy acquisition makes no mention of Pet360. I've seen no mention of it in any discussions of the Chewy deal.

I asked PetSmart if it had any comment on the role of Pet360 once the Chewy deal was completed, and a spokesperson said that was not something PetSmart would comment on.

In late March, Pet360 took a seven year lease on space for 20 near Grand Central Station NYC.

Mark Vadon, who sold Zulily to Liberty Media / QVC for $2.4 billion, was also behind the Chewy deal as an early investor and chairman.

Meanwhile, Pet360's former CEO Brock Weatherup has gone over to the other side, having sold his latest startup, PetCoach, to Petco and moved to San Diego to work with them as EVP, Strategic Innovation and Digital Experience.

Chewy has a fulfillment center in Mechanicsburg PA.

Pet360 being acquired by PetSmart for $130 million, plus potential $30 million earnout

Tom Paine

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On August 19, while announcing its earnings, PetSmart confirmed it was acquiring Plymouth Meeting-based Pet360 for $130 million plus a potential $30 million earnout. At the same time, the company said it was exploring other strategic options, including a possible sale.

PetSmart's CEO said that even as the company considers a possible sale, it is acquiring
Pet360, an online merchant of pet food, supplies, meds and services, to leverage and expand its ecommerce business.

In 2011, Pet360 raised $18 million from Updata Partners and LLR Partners. LLR Partners took part in a previous $10 million round in 2007.

PetSmart has seen its sales slump recently and has been pushed by its primary investors, Longview Asset Management LLC and Jana Partners LLC, to explore options. PetSmart posted a profit of $98.1 million on revenue of $1.73 billion in the quarter ended August 3.

Pet360's revenue wasn't disclosed. Around 125 Pet360 employees will remain in Montgomery County after the sale, Pet360 CEO Brock Weatherup told Technical.ly.

The deal would be LLR Partners' second large announced exit in a month, the first being Quintiq's by Daassault Systemes for about $336 million announced in late July.

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Competition heats up in online pet food & supplies business; Everyone is raising funds and Amazon gets in

Competition may be heating up for Plymouth Meeting-based Pet360 (which operates under PetFoodDirect.com and other brands), a leader in the online pet food and supplies market which just last week announced an $18 million round of equity financing lead by Updata Partners and joined by previous investor LLR Partners of Philadelphia.

Today, Amazon got into the game through Quidsi, the New Jersey-based online retailer (Diapers.com, Soap.com) founded by some bright Wharton people that it acquired last year for $540 million. Quidsi introduced Wag.com, which will offer free shipping for orders over $49. Quidsi has experience with customer service and the logistics of picking and shipping often bulky items on a low cost basis.

Also today, New York-based PetFlow today announced a Series B funding round of $10 million. PetFlow is basically in the same business, although they say they focus on healthier foods and hard to find items.

All of this led many commentators today to make comparisons to the Pets.com fiasco of the 2000 Internet bubble era. But people in the US spend over $50 billion a year on their pets, its a growing market, and there is a much better understanding today of the markting, economics and logistics of online retailing. Whether there will be room for three or more major players in the market, though, is another question.

Daily Links 6/28/2011: Updata Partners leads $18 million investment in Plymouth Meeting's Pet360

Mark Suster: Understanding the Changes in the Software & Venture Capital Industries (PE Hub)

Updata Partners Leads $18 Million Investment in Plymouth Meeting-based Pet360, Inc. (PR Newswire)

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