Blackstone Agrees to Acquire Rover in $2.3 Billion Deal

Blackstone Inc. has agreed to acquire Rover Group Inc., the largest online marketplace for pet services, in an all-cash transaction valued at approximately $2.3 billion.

Blackstone's $11 per share bid represents a significant 61 percent premium over Rover's 90-day trading average, implying a 30x 2024E Adj. EBITDA multiple. The deal is expected to close in the first quarter of 2024 and includes a 30-day "go-shop" provision expiring December 29th, though there may be limited interest at this price.

Seattle-based Rover went public in a $1.35 billion merger with Nebula Caravel Acquisition Corp., a special purpose acquisition company sponsored by San Francisco-based True Wind Capital, in August 2021. Despite strong recent performance, with shares up 131 percent year-to-date prior to the announcement, Rover continued to trade below its 2021 SPAC price of $10.

The Seattle-based company, which connects pet owners with a variety of pet care services, reported over 93 million services booked from its inception to September 2023, serving more than 4 million pet owners across North America and Europe.

Per Seattle technology publication GeekWire, Rover launched following an idea from Seattle venture capitalist Greg Gottesman, first shared at an early-stage startup gathering in 2011. The business was then incubated inside Seattle-based investor Madrona Venture Group.

In recent years, Rover faced similar headwinds to other pet-focused businesses coming out of the pandemic, reckoning with changing consumer preferences, a return to the office, and weaker macroeconomic conditions. Despite the less-than-favorable environment, the business maintained momentum, guiding toward topline growth this year of more than 25 percent.

That's in sharp contrast to other industry players, with Petco shares dropping more than 21 percent this week following a third-quarter sales and earnings miss. Management attributed the shortfall to the same challenged market environment, along with internal operational turnarounds.

Blackstone is also picking up a market leader — Rover's closest competitor is Wag!, a significantly less-scaled company trading below a $100 million market value.

Rover co-founder and CEO Aaron Easterly is expected to remain with the business near-term and expressed enthusiasm with the transaction. “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 Easterly.

Senior Managing Director Sachin Bavishi and Principal Tushar Gupta led the deal from Blackstone's side.

Goldman Sachs & Co. is acting as lead financial advisor to Rover, alongside Centerview Partners. Wilson Sonsini Goodrich & Rosati is acting as Rover's legal counsel. Evercore is acting as lead financial advisor to Blackstone, alongside Moelis & Company. Kirkland & Ellis LLP is acting as legal counsel to Blackstone.

Sam Hillier

Sam Hillier is a reporter at Transacted covering private equity and investment banking. He previously spent time as an investment professional focused on direct buyouts, as well as an earlier strategic advisory stint.