Coles walks away from $4b-plus deal to acquire Petbarn owner Greencross

Supermarket giant Coles Group (ASX: COL) has abandoned plans to acquire pet care company Greencross Pet Wellness from private equity group TPG Capital, ending discussions around a deal reported to be worth more than $4 billion including debt.

Coles this morning confirmed in an ASX announcement that it has ceased discussions with TPG regarding the potential acquisition.

The brief statement indicates that Coles hit a stumbling block during its discussions which were first confirmed in a statement to the ASX on 1 July this year.

"Coles applies a disciplined approach to acquisitions, and as one of Australia’s leading retailers, regularly assesses strategic opportunities that may complement its existing business," says Coles today.

Coles shares have eased since the company confirmed it was in discussions with TPG Capital which acquired Greencross in 2019 for $675 million.

Greencross operates 247 Petbarn stores, 143 veterinary clinics and 28 specialty and emergency hospitals across Australia and when it was acquired by TPG Capital the deal was based on an enterprise value of close to $1 billion.

The abandoned acquisition comes on the heels of the closure in April this year by Coles of its Swaggle online pet supplies business after just two years of operation.

The push by Coles into the pet market with a potential Greencross deal follows supermarket rival Woolworths (ASX: WOW) acquiring a 55 per cent stake in PetStock for $586 million four years ago, a deal that gave it a significant foothold in the fast-growing pet care market.

The deal was was approved by the Australian Competition and Consumer Commission on the condition that Petstock divest a portion of its store network.

The Greencross deal would have represented a far larger bet on the sector, dwarfing Woolworths' PetStock investment and positioning Coles as the dominant supermarket-backed player in Australian pet retail.

With Coles now stepping back, market analysts expect TPG to pursue potential alternative exit options for Greencross.

The private equity group has previously flagged a potential ASX listing and in 2023 was reported to have pursued a sale to EBOS Group, a major player in the animal health and pet care industry. Both options failed to proceed.