Bulletin: PetSmart And Petco Holdings Ratings Are Currently Unchanged On Possible Merger Discussion

NEW YORK (Standard&Poor's) Sept. 21, 2015--Standard&Poor's Ratings Services said today that its ratings and outlook on pet supply retailers PetSmart Inc. (B+/Stable/--) and Petco Holdings Inc. (B/Stable/--) are not currently affected by published reports that the companies are discussing a potential merger.  A merger of the two companies would be subject to regulatory approval, which could be challenging since market reports indicate that a combined PetSmart and Petco account for more than half of the revenues in the U.S. pet supply industry. Still, we believe there is some likelihood of the merger to consummate since PetSmart and Petco face considerable competition from online retailers, grocers, and discount stores. We also think there are considerable integration risks,

...NEW YORK (Standard & Poor's) Sept. 21, 2015--Standard & Poor's Ratings Services said today that its ratings and outlook on pet supply retailers PetSmart Inc. (B+/Stable/--) and Petco Holdings Inc. (B/Stable/--) are not currently affected by published reports that the companies are discussing a potential merger. A merger of the two companies would be subject to regulatory approval, which could be challenging since market reports indicate that a combined PetSmart and Petco account for more than half of the revenues in the U.S. pet supply industry. Still, we believe there is some likelihood of the merger to consummate since PetSmart and Petco face considerable competition from online retailers, grocers, and discount stores. We also think there are considerable integration risks, given the companies' size, different store formats, and operating characteristics. If a merger transaction were to be announced, we could place the ratings on PetSmart on CreditWatch, most likely with negative implications,...

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