Private equity giant Blackstone will acquire pet care app Rover in an all-cash deal valued at $2.3 billion, the companies announced Wednesday, Nov. 29, 2023. (AP Photo/Mark Lennihan, File)
By Diana Li and Ryan Gould | Bloomberg
Rover Group, an online marketplace in the fast-growing market for pet care services, has soared after agreeing to be acquired by Blackstone Inc. in a $2.3 billion all-cash deal, the companies said Wednesday.
The pet economy exploded during the pandemic as locked-down Americans adopted cats, dogs and other animals. But now, with stubborn inflation for basic commodities including those in the pet category, many owners are finding it increasingly expensive to care for their animals. NIQ data from October shows that retail pet care prices have risen about 6% since last year, higher than overall inflation rates.
Blackstone is paying $11 a share for the dog-walking and pet-sitting company, a premium of about 61% to its average price in the 90 trading days ended Tuesday. The parties expect the deal to close in the first quarter of 2024.
Rover shares rose as much as 31% to $11.10 after the announcement, the biggest gain on record.
Seattle-based Rover went public through a merger with Nebula Caravel Acquisition Corp., a special purpose acquisition company sponsored by San Francisco-based True Wind Capital, in August 2021. Valued at approximately About $1.35 billion, Rover is among a flood of companies to list through the so-called de-SPAC process at a time when venture capitalists and hedge funds have sought quick returns amid low interest rates.
Now, as rates rise, companies that merge into SPACs have become prime buyout targets for cash-rich private equity firms looking for bargains and eager to return capital to their limited partners.
Elsewhere in the pet industry, shares of Petco Health & Wellness Co. fell. by as much as 21% on Wednesday after it reported third-quarter sales and earnings that missed analysts’ estimates. The retailer said it is navigating a challenging consumer environment and undergoing an operational reset to appeal to pet owners more broadly and better manage costs.
Goldman Sachs, Centerview Partners are financial advisers for Rover. Evercore and Moelis & Co. are financial advisors to Blackstone.
