PETCO Buyout

PETCO Animal Supplies, Inc. (PETC)
$1.6B Buyout

Summary

$1.8B buyout by Leonard Green and Texas Pacific

At $29 per share, $1.66B total
$1.8B, including assumed debt

Financing

Equity: TPG ($415mm), Leonard Green ($350mm)
Mezzanine: Goldman ($500mm)
Debt: Credit Suisse, BoA, Wells Fargo ($850mm)
Total: $2.115B

Deal announced 7.14.06

Same sponsors took PETCO private in 2000

Deal summary
Took company public again in 2002

IPO prospectus

Sold off their remaining interest in 2004

Prospectus supplement

Closed 10.26.06

Press release - Tender Offer extended to 10.26.06
Form 8-K
Form 25
Form 15

Advisors

Financial

PETCO: UBS

Legal

PETCO: Pillsbury Winthrop
Sponsors: Skadden

Merger Agreement

General

EDGAR filing
Hyperlinked version
Detailed hyperlinked index follows

Article I Definitions

1.1 Definitions
1.2 Terms Generally

Article II Merger

2.1 The Merger; Closing; Effective Time
2.2 Conversion of Shares
2.3 Payment of Cash for Merger Shares
2.4 Exchange of Stock Certificates
2.5 Dissenting Shares
2.6 Company Options and Company Restricted Stock Units

Article III Surviving Corporation

3.1 Certificate of Incorporation
3.2 Bylaws
3.3 Directors and Officers

Article IV Company Reps

4.1 Corporate Existence and Power
4.2 Corporate Authorization
4.3 Corporate Records

4.4 Consents and Approvals; No Violation
4.5 Capitalization
4.6 Company SEC Reports

4.7 Provided Information
4.8 Absence of Certain Changes or Events
4.9 Litigation

4.10 Taxes
4.11 Employee Benefit Plans; ERISA
4.12 Labor Matters
4.13 Compliance With Laws
4.14 Finders' Fees

4.15 Environmental Matters
4.16 Related Party Transactions
4.17 Opinion of Financial Advisor
4.18 Distribution Center Leases

Article V Parent - Merger Sub Reps

5.1 Corporate Existence and Power
5.2 Corporate Authorization
5.3 Governmental Authorization

5.4 Non-Contravention
5.5 Disclosure Documents
5.6 Finders' Fees

5.7 Financing
5.8 Ownership of Common Shares
5.9 Interest in Competitors

5.10 Solvency of the Surviving Corporation Following Merger
5.11 No Other Information
5.12 Management Agreements

Article VI Covenants of the Company

6.1 Conduct of the Company
6.2 Company Stockholders Meeting
6.3 Access to Information
6.4 Other Potential Acquirers
6.5 Resignation of Directors
6.6 WARN Act

Article VII Covenants of Parent and Merger Sub

7.1 Voting of Shares
7.2 Director and Officer Liability

Article VIII Additional Agreements

8.1 Commercially Reasonable Efforts
8.2 Consents and Approvals
8.3 Certain Filings

8.4 HSR Act
8.5 Financing
8.6 Debt Tender

8.7 Public Announcements
8.8 Further Assurances
8.9 Notices of Certain Events

8.10 Confidentiality Agreement

Article IX Closing Conditions

9.1 Each Party
9.2 Parent and Merger Sub
9.3 Company

Article X Termination

10.1 Termination
10.2 Termination Fee
10.3 Effect of Termination

Article XI Miscellaneous

11.1 Notices
11.2 Survival of Representations and Warranties
11.3 Amendments and Waivers

11.4 Expenses
11.5 Successors and Assigns
11.6 Governing Law

11.7 Counterparts; Effectiveness
11.8 Severability
11.9 Specific Performance; Jurisdiction

11.10 Entire Agreement
11.11 "Knowledge"
11.12 Construction

Other Agreements

Amend executive employment agreements

Amendments

Proxy Solicitation / 13e-3 Filings

Shareholder meeting

Scheduled for 10.23.06

Proxy statement

Definitive proxy statement 9.18.06

Preliminary proxy statement 8.11.06

13e-3 transaction

Leonard Green partner is a PETCO director

John Danhakl

Schedule 13e-3 filings

Schedule 13e-3 8.11.06

Exhibits

Amendment #1 9.06.06

Exhibits

Amendment #2 9.18.06

Exhibits

SEC comment letters

SEC letter 8.25.06
Response 9.06.06
Response 9.06.06
Response 9.06.06
Response 9.06.06
SEC letter 9.12.06
Response 9.18.06

Financing

Proxy statement summary

Equity commitment letters

Green Equity Investors IV $350mm
TPG Partners V $415mm

Debt commitment

Credit Suisse
Commitment letter

Merger agreement provisions

§5.7 Financing representation
§8.5 Financing covenant
§8.6 Debt tender covenant

Deal Protection

No shop covenant

PETCO had 20 business day go shop period

See Merger Agreement § 6.4

Proxy statement summary

Break-up fee

Break-up fee escalates from $30mm to $50mm on 7.20.06

See Merger Agreement § 10.2
Proxy statement summary

Fairness Opinions - Advisor Presentations

Fairness opinions

Proxy statement disclosure

Advisor board presentations
Filed as Schedule 13e-3 exhibits

UBS 5.08.06
UBS 7.13.06

Financial projections

Proxy statement summary

Statements about fairness
Per going private rules

Leonard Green partner - TPG entities

Shareholder Litigation

Proxy statement summary

Complaints

Lerach Coughlin 7.19.06
Lerach Coughlin consolidated 8.28.06

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