US giant seals deal to buy Pets at Home for £955m

The agreement for 955m, including debt, is thought to be the biggest private equity deal of the year to date in the UK.

It represents a massive return for the seller, Bridgepoint Capital, which paid around 230m for the business in 2004.

Matt Davies, chief executive of Pets at Home, said: "KKR's investment represents a resounding endorsement of our success to date and a validation of our colleagues' commitment and enthusiasm towards pets and pet owners across the UK.

"KKR has a track-record of investing in world-class retailers around the world, and it's exciting for us to join the ranks of KKR retail investments like Alliance Boots, Toys R Us, Dollar General and Maxeda.

"It has been a pleasure to work with Bridgepoint over the last six years and we are proud of all we have accomplished with their support."

Pets at Home has more than 250 stores, including 25 in Yorkshire. It has doubled in size since the Bridgepoint-backed buyout in 2004 and last year had a turnover of 404.2m, with earnings before interest, tax, depreciation and amortisation of 70m.

John Pfeffer, a member of KKR, said: "We are delighted to have the opportunity to back the outstanding Pets at Home management team led by Matt Davies and to invest in this exceptional company.

"Pets at Home leads the UK pet market with 4,200 passionate and expert colleagues and a well-differentiated retail proposition.

"We are enthusiastic about the significant further potential for Pets at Home to grow, develop and continue to deliver its unmatched breadth of products, store environment, competitive pricing and customer service."

Pets at Home announced in October that it had appointed JP Morgan Cazenove to advise on a potential initial public offering of the company this year.

But market conditions were unfavourable so the group looked to private equity firms. KKR is believed to have seen off rival bids from Apax, Bain and TPG.

Analysts said the higher-than-expected price could lead other companies mulling sales – such as New Look and Ocado – to opt for a private equity deal rather than an IPO.

Founded in 1991, Pets at Home has experienced rapid growth over recent years, driven by product innovation, new store openings and the development of new services, such as grooming and veterinary.

In addition to the retail outlets, the company operates 54 veterinary surgeries on a joint venture basis under the brand name, Companion Care.

KKR said it would continue the growth.

Pets at Home recently announced a record holiday season, reporting like-for-like sales growth of 6 per cent in the six weeks to January 7 and 9

per cent like-for-like sales growth for the 41 weeks ending January 7.

Nomura is acting as financial adviser to KKR on the deal, while Nomura, Calyon and KKR Capital Markets are arranging debt financing, with the help of Commerzbank.

Bridgepoint is being advised by Rothschild.

Founded in 1976 by Henry Kravis and George Roberts, KKR has $54.8bn in assets under management.

Bridgepoint is the owner of Leeds Bradford International Airport.