(Adds details, analysts' comments)
July 7 PetSmart Inc said it is
reviewing potential changes in its capital structure, days after
activist hedge fund Jana Partners LLC said it planned to ask the
pet products retailer to explore a sale.
The company said on Monday it was evaluating changes, with a
focus on returning capital to shareholders. (1.usa.gov/1jYNsk6)
Jana Partners, PetSmart's largest shareholder with a 9.9
percent stake, also said on Thursday it would discuss the
company's capital structure, including returns to shareholders,
with the management and board, shareholders and other interested
Jana Partners was not immediately available for comment on
PetSmart's sales have suffered due to its aging store base
and growing competition from online retailers. The company
reported its first drop in quarterly same store sales in seven
years for the quarter ended May 4.
PetSmart's shares rose as much as 2 percent at $68.59 in
Morningstar analyst Liang Feng said PetSmart would have to
take on debt to return capital to shareholders but added that
the company was unlikely to do so as it was already repurchasing
shares and providing decent returns.
PetSmart announced a $535-million share repurchase plan in
Morgan Stanley upgraded the stock to "equal-weight" from
"underweight" on Monday, saying a potential merger with
privately held Petco represented "the greatest source of
Petco itself was taken private by Leonard Green & Partners
and Texas Pacific Group for $1.68 billion in 2006.
(Reporting by Sruthi Ramakrishnan and Siddharth Cavale in
Bangalore; Editing by Saumyadeb Chakrabarty)