A bid for European online pet platform Zooplus by US private equity outfit Hellman & Friedman has positive and negative implications for Pets at Home (PETS).

Zooplus is a direct online competitor in the cut-throat pet supplies market and could thrive under private equity ownership. However, the punchy multiple ascribed to Zooplus also underscores the attractions of a market boosted by the structural expansion in pet ownership under lockdown.

Hellman & Friedman has bid €390 per share for Zooplus, a 40% premium to the undisturbed share price and valuing the pure online player on a punchy 45 times 2021 EBITDA (earnings before interest, tax, depreciation and amortisation.

H&F aims to be a long-term strategic and financial partner to help Zooplus strengthen its position in Europe, which could have negative implications for Pets at Home’s online sales should Zooplus make substantial growth-oriented investments at the expense of short-term profits.

Numis Securities concedes the impact of the Zooplus acquisition ‘looks to be quite binary’ for Pets at Home. Numis expects Zooplus would ‘either look to double-down (as it is suggested will be their strategy more broadly) or exit the market’.

Yet either way, the broker views ‘the unit economics of online and the unique customer proposition that Pets at Home has built in the UK as providing a long-term shield to their market positioning and profitability’.

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