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Petco acquires e-retailer Drs. Foster & Smith

November 24, 2014 11:53 AM
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It’s been a big year for acquisitions in the specialty pet supply e-commerce business, and the latest retailer with a new owner is direct marketer Drs. Foster & Smith Inc.

Retail chain Petco Animal Supplies Inc., No. 257 in the 2014 Internet Retailer 2014 Top 500 Guide announced last week plans to acquire Drs. Foster & Smith (No. 135). The purchase price was not disclosed.

Drs. Foster & Smith, which generated Internet Retailer-estimated web sales of $205 million in 2013, had been looking for a deal and an acquirer for about seven months to “take the company to the next level,” says Drs. Foster & Smith manager for Internet marketing and media Gordon Magee. Drs. Foster & Smith is on track for record sales and is profitable, Magee says, but the company does not disclose financial data.

The acquisition by Petco, which generated Internet Retailer-estimated web sales of $76.9 million in 2013, is expected to be complete in early 2015. When the deal is done, it is expected that Drs. Foster & Smith will continue to operate as a stand-alone brand along with its various e-commerce sites, including DrsFosterandSmith.com, LiveAquaria.com and PetEducation.com, Magee says.

The management of the company, including founding veterinarians Race Foster and Marty Smith, are expected to remain after the deal closes. Drs. Foster & Smith also will maintain its corporate headquarters and distribution facility in Rhinelander, WI.

The acquisition will complement Petco's existing capabilities in pet health to include prescription services such as prescription diets, preventive care and a broad base of products created by licensed veterinarians, says Petco CEO Jim Myers.

Drs. Foster & Smith has been a direct marketer of pet supplies, medicine and related products since 1983. The company has been selling online since 1996.

Drs. Foster & Smith says Petco, which has been selling online since 2001 and operates a network of 1,300 stores in the U.S., Mexico and Puerto Rico, will help the direct marketer gain more national exposure, Magee says.

The acquisition of Drs. Foster & Smith by Petco is the second major deal involving a big retail chain and an e-commerce company in the pet supplies retailing business this fall.

In September PetSmart Inc. (No. 362) purchased Pet360 for $130 million with the possibility of additional performance-based payments totaling up to $30 million by the end of 2016.

The Pet360 network is composed of at least nine pet supplies e-commerce sites and serves more than 12 million pet owners each month, PetSmart says. Pet360, based in Philadelphia, also operates PetMD.com, an information site for pet health information and PetFoodDirect.com, which sells pet food, medications and supplies. Pet360 also operates BlogPaws, a platform for pet bloggers and social media enthusiasts.

 

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