(Adds details on Petco and background on the sector)
By Lauren Hirsch, Greg Roumeliotis and Olivia Oran
NEW YORK, Aug 3 (Reuters) - Petco Animal Supplies Inc has hired Goldman Sachs Group Inc to lead a potential initial public offering or sale that could value the pet supplies retailer at between $4 billion and $5 billion, including debt, according to people familiar with the matter.
San Diego-based Petco, which is owned by private equity firms TPG Capital LP and Leonard Green & Partners LP, is working with Goldman Sachs as it seeks an outright sale to another company or private equity group, the people said on Monday.
Petco is also working with Goldman Sachs, Bank of America Corp and JPMorgan Chase & Co to prepare for an IPO in New York in case the sale process fails to meet its owners’ valuation expectations, the people added.
The sources asked not to be identified because the deliberations are confidential. Petco, TPG, Leonard Green, Goldman Sachs, JPMorgan and Bank of America declined to comment.
TPG’s and Leonard Green’s decision to explore a sale or IPO of Petco comes as consumers’ willingness to spend money on their pets spurs growing investment and dealmaking in the sector.
In March, a private equity consortium led by BC Partners Ltd took another pet supplies retailer, PetSmart Inc, private for $8.7 billion.
Shares of Blue Buffalo Pet Products Inc, which is backed by private equity firm Invus Group LLC, jumped as much as 37 percent following its IPO last week, valuing the maker of Blue Wilderness and other dog and cat foods at $5.38 billion.
Petco, which started out in 1965 as a mail-order company, was taken private in a $1.8 billion leveraged buyout by TPG and Leonard Green in 2006. The company operates more than 1,400 stores across the United States, Mexico and Puerto Rico.
Bloomberg News reported last week that Petco was interviewing banks for an IPO. (Reporting by Lauren Hirsch, Greg Roumeliotis and Olivia Oran in New York; Editing by Diane Craft and Bill Rigby)