Pets PE: Arbor launches Red Collar, Sentinel is buying Pet Supplies Plus

Arbor Investments closed its first deal in the pet space.

The buyout shop said Dec. 3 that it acquired the exclusive brands business of Mars Petcare US Inc. The unit makes private label pet food and treats for retail customers. Terms weren’t disclosed.

The acquisition includes five plants, in Orangeburg, South Carolina; Washington Court House, Ohio; Miami and Clinton, Oklahoma; and San Bernardino, California. The group employs about 500.

Mars Petcare exclusive brands has relaunched as Red Collar Pet Foods, which will be located in Franklin, Tennessee. Chris Hamilton, president and CEO, will lead Red Collar.

Pets are viewed as one of the more lucrative sectors for PE. U.S. consumers spent $69.5 billion on pets in 2017, the American Pet Product Association reports. This is expected to rise 3.7 percent to $72.1 billion in 2018.

“People treat their pets like members of the family, and they’re spending more money on them than ever before,” said Chris Harned, an Arbor partner.

Arbor used its fourth flagship fund, which closed on $765 million in 2016, to invest in the Mars Petcare unit. The firm is expected to invest heavily in Red Collar’s capex, adding more capabilities to its plants. It will also be in the hunt to buy more pet-food companies, Harned said.

While Red Collar is Arbor’s first pet deal, it’s not the first for Harned. The executive, who joined Arbor in 2016 and is a partner, was part of the team at Cypress Group when it acquired Meow Mix in 2003. Harned is also a founding investor of Freshpet and served as its vice chairman from 2006 to 2010.

The Mars Petcare transaction comes as another pet deal nears finalization: Sentinel Capital is buying Pet Supplies Plus from Irving Place Capital, two sources said. News of the deal appeared on the FTC website on Nov. 30.

An early-termination notice appears on the FTC site after the regulator does an antitrust review of a deal.

Irving Place put Pet Supplies up for sale in late 2017, the Wall Street Journal reported. Robert W. Baird and Houlihan Lokey advised on the process, the story said.

Pet Supplies Plus, Livonia, Michigan, sells dog and cat food as well as toys, apparel and supplies. Irving Place acquired the company in 2010.

Sentinel declined comment. Irving Place and Pet Supplies could not be reached.

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