Blackstone to take private Rover Group in $2.3bn deal

February 2024 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

February 2024 Issue

Private equity (PE) giant Blackstone has agreed to acquire pet care company Rover Group in a $2.3bn all-cash deal.

Under the terms of the deal, Blackstone will pay around $11 a share, a premium of 29.4 percent over the last closing price of the company’s stock and a premium of approximately 61 percent to the volume weighted average share price of Rover’s class A common stock over the 90 trading days ending on 28 November 2023.

The transaction is currently expected to close in the first quarter of 2024, subject to the approval of Rover’s stockholders and the satisfaction of required regulatory clearances and other customary closing conditions. The Rover board of directors has approved the merger agreement and recommended that stockholders approve the transaction and adopt the merger agreement. Upon completion of the deal, Rover will no longer be publicly-listed; it will become a privately held company and continue to operate under its existing name and brand.

Under the terms of the Blackstone acquisition, there is a 30-day ‘go shop’ period during which Rover and its advisers have the option to pursue alternative proposals from third parties.

“We are thrilled for this next chapter in the Rover story and look forward to the partnership with the Blackstone team, who share our conviction, excitement and strategic vision,” said Aaron Easterly, co-founder and chief executive of Rover. “Blackstone brings deep expertise in partnering with innovative technology companies, and with their support and collaboration, we plan to continue investing in our business in service of our mission to make it possible for everyone to experience the unconditional love of a pet in their lives. This transaction delivers immediate and compelling value to Rover stockholders, and is a testament to the commitment and hard work of our team and an exciting milestone for Rover.”

“We are excited to partner with Aaron and the exceptional Rover team, whose vision, creativity and data-driven approach have built the company into an industry leader,” said Sachin Bavishi, a senior managing director at Blackstone. “Our investment highlights Blackstone’s high-conviction focus on backing rapidly growing digital businesses and supporting talented entrepreneurs with extensive resources to take advantage of transformational growth opportunities. We look forward to working with Rover as they continue working to drive innovation for pet owners and providers.”

“We believe Rover has a significant runway for growth as pet owners increasingly place a premium on high-quality care, flexibility and convenience,” said Tushar Gupta, a principal at Blackstone. “We look forward to partnering with management to build upon their leading online marketplace and leveraging Blackstone’s extensive expertise and resources to support the company’s continued expansion as a private company.”

Rover operates a platform for connecting pet owners with dog walking and pet sitting services. It provides services in 10 countries: the US, Canada, US, France, Spain, Italy, Germany, Sweden, Netherlands and Norway.

Heavily impacted by the coronavirus (COVID-19) pandemic, Rover laid off 41 percent of its workforce in March 2020. However, it has recovered strongly in recent years, becoming a publicly traded company through a merger with Nebula Caravel Acquisition Corp, a SPAC-sponsored by True Wind Capital in August 2021. The deal valued Rover at $1.35bn when it was announced in February of that year.

In November 2023, the company recorded “an outstanding third quarter” according to Mr Easterly, with 30 percent revenue growth to $66.2m and a net income of $10.5m. During the quarter, Rover facilitated 1.8 million bookings for pet services, an increase of 20 percent compared to the same period in 2022. Today, Rover is active in more than 30,000 neighbourhoods globally. Total bookings for Rover’s international markets were up 45 percent in the third quarter of 2023.

The global pet industry is expected to grow to $500bn by 2030, up from $320bn in 2023, according to Bloomberg Intelligence.

Blackstone states that it is the world’s largest alternative asset manager with more than $1 trillion in assets under management.

Richard Summerfield