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PetSmart and Chewy, two of the most popular pet supply retailers in the United States, have recently entered into a credit agreement. This agreement is significant as it allows PetSmart to borrow up to $4.6 billion to finance the acquisition of Chewy.
The credit agreement was signed in April 2021 and is set to expire in 2026. The agreement is between PetSmart Holdings Inc. and a group of lenders, including JPMorgan Chase Bank, Bank of America, Citigroup, Barclays Bank, and Credit Suisse.
Under the terms of the agreement, PetSmart can borrow up to $2.5 billion in incremental term loans, with the option to borrow an additional $2.1 billion in incremental term loans or revolving credit facilities.
This credit agreement provides PetSmart with the financial flexibility to fund the acquisition of Chewy, which was completed in 2017. Chewy has since become a significant contributor to PetSmart`s overall revenue, with sales increasing by over 40% in 2020.
The credit agreement also allows PetSmart to refinance its existing debt, which was taken on to acquire Chewy. This refinancing will result in lower interest payments and provide PetSmart with more financial stability and flexibility.
In conclusion, the PetSmart and Chewy credit agreement is a significant development in the pet supply industry. It provides PetSmart with the financial flexibility to continue to grow and expand its business, while also reducing its debt and interest payments. As pet ownership continues to grow in the United States, PetSmart and Chewy are well-positioned to meet the demand for pet products and services.