Silver Lake and Shore Capital deal creates large chain of US petcare clinics

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Private equity groups Silver Lake and Shore Capital Partners have struck a deal to create one of the biggest US veterinary care groups valued at $8.6bn, with ambitions to further consolidate a sector historically dominated by independently-owned businesses, said people briefed on the matter.

The merger between Southern Veterinary Partners and Mission Veterinary Partners, both of which were part-owned by Shore, will create a network of vet hospitals and clinics spanning more than 750 locations and generating $580mn in yearly earnings before interest, taxes, depreciation and amortisation.

The veterinary sector is benefiting from a surge in demand as people seek care for their animals following a pandemic boom in ownership.

About two-thirds of 2,300 consumers surveyed by Morgan Stanley earlier this year visited the vet one to three times in the past six months, up four percentage points from a 2022 survey.

As part of the deal, Silver Lake and Shore Capital will make a $4bn fresh equity investment split evenly between them. The newly combined company has raised roughly $3bn of debt, said people briefed on the matter.

Southern and Mission’s founders and employees will have shareholdings worth almost $1.5bn rolled over, and a syndicate of large co-investors will fund a few hundred million dollars of extra equity. The new company will carry less leverage than prior to the recapitalisation, one person said.

The deal is expected to be announced in the coming weeks. People briefed on it said the combined company is likely to pursue more deals to roll up vet clinics and hospitals, as private equity groups play an increasingly dominant role in consolidation sweeping the petcare industry.

Silver Lake and Shore declined to comment. Bloomberg previously reported that the two private equity groups were in talks over a deal to combine Southern and Mission.

Rival company IVC Evidensia is owned by Sweden-based buyout group EQT, while PetVet is owned by KKR. Among the other biggest petcare clinic networks are AEA-backed AmeriVet Veterinary Partners and the veterinary health division of family-owned consumer group Mars, which operates more than 3,000 clinics worldwide.

Southern, in which Shore has been an investor since 2014, operates more than 420 locations across the US, while Mission, which Shore helped to found in 2017, operates more than 330 vet hospitals nationwide.

About 85 per cent of Mission’s shares have historically been owned by the vets that form part of its network.

Billionaire investor Justin Ishbia owns Shore Capital. Last year he bought a majority stake in the Phoenix Suns basketball team alongside his brother Mat.