Sentinel Exits Pet Supplies Plus

Sentinel Exits Pet Supplies Plus

Sentinel Capital Partners has agreed to sell Pet Supplies Plus to publicly traded Franchise Group for $700 million in cash.

Sentinel acquired Pet Supplies Plus, the third-largest pet specialty chain in the US, from Irving Place Capital in December 2018.

Pet Supplies Plus (PSP) is a franchisor and operator of pet-specialty stores. The company’s system spans 33 states and is currently comprised of more than 500 stores with 60% franchised and 40% company-owned locations.

PSP founders, Harry Shallop and Jack Berry, opened their first store in Redford, Michigan in 1988. Today the company is headquartered near Detroit in Livonia, Michigan. For fiscal year 2020, PSP is estimating total systemwide revenue of approximately $1.2 billion, company revenue of over $825 million and adjusted EBITDA of nearly $80 million.

Pet Supplies Plus is listed on Entrepreneur Magazine’s 2021 Franchise 500 List as the No. 21 franchise, the highest of all other pet franchises.

Franchise Group (NASDAQ: FRG) is an operator and acquirer of franchisable businesses. The company has four segments: Liberty Tax, a provider of online and in-person tax preparation services in the United States and Canada (2,500 locations); Buddy’s, a rent-to-own specialty retailer of electronics, furniture, and appliances (300 locations); American Freight, a discount retailer of home appliances, furniture and mattresses (300 stores); and The Vitamin Shoppe, an omnichannel specialty retailer and wellness company (750 company-operated stores).

Franchise Group changed its name in September 2019 from Liberty Tax, Inc., and is headquartered in Virginia Beach, Virginia.

To review Franchise Group’s investor presentation on its acquisition of PSP (embedded in its January 25, 2021 8-K) click HERE.

The sale of PSP to Franchise Group is expected to close in March 2021. “We look forward to welcoming Pet Supplies Plus, its management team, employees, franchisees and neighbors to Franchise Group when this transaction closes,” said Brian Kahn, CEO of Franchise Group. “PSP adds another franchise concept with strong unit economics, diversification into an economically resilient and secularly growing pet industry, and a brand that has and will continue to experience robust unit expansion from its franchise system.”

New York City-based Sentinel Capital Partners invests in management buyouts, recapitalizations, corporate divestitures, and going-private transactions of businesses with EBITDAs up to $65 million. Sentinel targets eight industry sectors: aerospace and defense, business services, consumer, distribution, food and restaurants, franchising, healthcare, and industrials.

© 2021 Private Equity Professional | January 26, 2021

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