Coles Group Ltd (ASX:COL) is reportedly nearing an agreement to acquire Petbarn owner Greencross in a deal worth more than $4 billion including debt, marking a major expansion beyond its core supermarket business.
The retailer confirmed earlier this month that it was conducting due diligence on Greencross, with reports suggesting negotiations on price are now substantially complete and an announcement could come within days.
National pet care platform
Greencross operates 247 Petbarn stores across Australia, alongside 143 veterinary clinics and 28 speciality and emergency hospitals.
The group also owns a 50% stake in New Zealand pet retailer Animates, in partnership with healthcare and pharmaceutical company Ebos Group Ltd.
The acquisition would give Coles a nationwide pet retail and veterinary services platform, offering recurring customer traffic and exposure to the growing pet care market.
Strategic move beyond supermarkets
The transaction would strengthen Coles’ position against rival Woolworths Group Ltd, which acquired a 55% stake in PetStock for $586 million four years ago.
However, investors have expressed concerns over the potential price and strategic fit, with Coles shares falling more than 4% after the due diligence process was confirmed.
The company may need to raise additional debt or issue equity to fund the purchase.
About Greencross
TPG Capital acquired Greencross in 2019 for $675 million, with an enterprise value of close to $1 billion.
An acquisition above $4 billion would deliver a substantial return for TPG after it abandoned plans for a Greencross initial public offering earlier this year amid volatile market conditions.