PetO emerges winner from Woolworths’ PETstock acquisition

The independently-owned PetO retail chain is emerging a major player in the $10bn pets sector after picking up assets forcibly divested to get Woolworths’ PETstock deal over the line.

PetO owners Nick Greenhalgh and David Rowe.

The nation’s largest independently-owned PetO chain is about to hit the big league in the $10bn pet industry after buying 41 retail stores and 25 vet clinics forcibly divested as a result of PETstock and Woolworths’ investment deal.

The forced divestment of the pet portfolio was imposed by the competition regulator when Woolworths bought a controlling stake in PETstock.

PetO, the Sydney-based business established by brothers Nick Greenhalgh and David Rowe in 2006, will become the third largest player in the pets goods and services sector with annual revenues to increase from around $50m to more than $200m once the deal is complete.

In late 2022, Woolworths chief executive Brad Banducci expanded into the fast-growing pets sector through the $586m purchase of a 55 per cent stake in PETstock.

At the time, the Australian Competition & Consumer Commission said it was seeking views on a proposed divestiture offered by PETstock in relation to its completed acquisitions of Best Friends Pets, Pet City, Animal Tuckerbox and Pet and Aquarium Warehouse in Eltham, Victoria.

The divestment was needed to help get the Woolworths deal across the line and win the approval of the ACCC.

CEO of Woolworths Brad Banducci with Juno. Picture: Chris Pavlich.

Many of the acquisitions were made by PETstock without notifying the ACCC, the regulator said.

These acquisitions, which the ACCC considered raised significant competition concerns, only came to light during its review into the proposed acquisition by Woolworths of a 55 per cent interest in PETstock, the regulator said in 2023.

PetO has now stepped in to buy those divested pet and vet operations.

The acquisition by PetO follows a court-enforced divestiture notice delivered by the ACCC to PETstock and Woolworths.

To reflect this divestiture, Woolworths’ purchase price of the 55 per cent stake in PETstock would be expected to be around $438m, down from the initial price tag of $586m.

PetO will grow from 17 NSW-based stores to 58 retail stores across the country, bringing it an entirely new customer base in Victoria, Western Australia, Queensland, and Tasmania.

PetO’s Mr Greenhalgh said the expansion came at the perfect time for PetO.

“Australia is right now experiencing record levels of pet ownership and increased demand for pet products,” he said. “We couldn’t think of a more exciting time to be expanding across the country.”

“At PetO, we think of ourselves as the cat and dog specialists. We know your furry friend is more than just a pet, they’re a member of your family – that’s why our business is centred around exceptional customer experience and expert advice.”

The brothers would not state the cost of the acquisitions, but said it was all internally funded with no outside investors tipping in money, leaving the pair as the main shareholders.

Bunnings, led by managing director Mike Schneider (seen here with his dog Henry) has also pushed into the $10bn pets goods sector and sees strong growth potential for the category.

The PetO team will grow tenfold to 1000 staff. Existing staff from the acquired stores will be retained, while additional positions will be created within a new support team, Mr Greenhalgh said.

PetO will also absorb 25 vet clinics under the Our Vet brand. These businesses will continue to offer specialised in-house services and products to pet owners in Queensland, Victoria, and NSW.

“This is an exciting new beginning for the Our Vet clinics, and we are thrilled to be continuing to offer our services to our loyal and dedicated customers.”

Mr Greenhalgh said the specialty pets sector enjoyed rapid growth through the Covid-19 pandemic, as pet owners spent up.

He said analysts expected the pet goods and services sector to grow between 5 and 10 per cent over the next three years. He said the pets fresh food category was particularly growing at a fast pace.