PetSmart has caught the eye of billionaire Henry Kravis.
The giant pet-supplies retailer, which announced in August it will groom itself for a new owner, has attracted the interest of buyout firms including Kravis’s KKR, The Post has learned.
It’s not yet clear that KKR and others are necessarily panting over PetSmart, sources cautioned. The Phoenix-based chain has been dogged by slowing growth, with its comparable year-to-date sales swinging into negative territory.
Indeed, PetSmart’s own board briefly pooh-poohed the idea of a sale this summer, denying a claim by activist investor Jana Partners that the company was a takeover target.
Jana, headed by billionaire Barry Rosenstein, disclosed a stake of nearly 10 percent in July.
Insiders speculate KKR wants a peek at PetSmart’s books as it basks in the success of its investment in Pets at Home, a British-based chain it took public in March for nearly $2 billion, reaping a 30 percent return on a 2010 buyout.
Other logical bidders for PetSmart could include Apax Partners, Bain Capital and Carlyle, sources said.
First-round bids for PetSmart are due by Halloween in a process that’s being run by JPMorgan Chase, according to two sources close to the action.
PetSmart isn’t allowing archrival Petco, which is owned by buyout firms TPG and Leonard Green & Partners, to participate in the auction, sources said.
“I think there is a reasonable chance the company sells,” according to one banker close to the process. “It all comes down to valuation.”
PetSmart and KKR didn’t return calls seeking comment. A Jana spokesman declined to comment.
Sources said KKR’s turnaround tack could include an aggressive move to expand PetSmart’s online business — an area where critics say management fiddled while the Web became increasingly populated with upstarts looking to sell pet food directly to consumers.
The 1,300-store chain is valued at $6.8 billion, which amounts to a big bite for a private-equity deal.
PetSmart’s revenue in 2014 rose only 1.6 percent from the year-ago period, with a minuscule 1.1 percent gain expected for next year, according to a July report from IBIS.
The research firm expects pet ownership will rise over the next five years, citing demand from “more single-person households and the aging population.”
As an alternative to a sale, PetSmart could borrow money and buy back shares to boost its stock price, an option Jana has roundly rejected.
PetSmart shares, which were trading at about $60 a share before Jana disclosed its stake, fell 13 cents Wednesday, to close at $68.88.