Pet services group Mad Paws (ASX: MPA) will close down two of its e-commerce businesses and sell its Pet Chemist division as part of a $62 million acquisition from Seattle-based Rover, which is snapping up the Sydney-based company's marketplace just over four years after its initial public offering (IPO).
The announcement comes nine months after Mad Paws appointed financial advisor Highbury Partnership to scope out potential sale opportunities.
Mad Paws has entered a scheme implementation deed (SID) with the US buyer at $0.14 per share, representing almost double the last MPA trading price of $0.076, but Rover is only interested in the marketplace business which allows users to seek and provide pet sitting, hosting, walking, training and grooming.
Meanwhile, Mad Paws' Pet Chemist - the largest such online operation for pets in Australia - will be acquired by Swedish-owned VetPartners, which under previous ownership in 2020 purchased then-ASX listed National Veterinary Care for $250 million.
Once the Pet Chemist sale is completed, substantial shareholder Howard Humphreys has agreed to resign as executive director of Mad Paws but will continue to be the CEO of the Pet Chemist business following the divestment.
The group's pet treat company Waggly and e-commerce brand Sash, which have been underperforming in recent times, will be closed.
Humphreys has written to the board stating his intention to vote in favour of the scheme, as has company's largest shareholder, the Bombora Special Investments Growth Fund.
With 1.4 million subscribed pet owner emails and some 70,000 pet sitters and dog walkers on the platform, Mad Paws' eponymous platform is the largest of its kind in Australia and is the result of a vision more than a decade ago when it was founded in 2014 by Justus Hammer, Jan Pacas and Alexis Soulopoulos.
This compares to more than six million pet parents who have booked through Rover's platform, which operates across more than 33,000 neighbourhoods across 17 countries across North America and Europe.
The number of pet services providers on the Mad Paws platform, and indeed the number of user sign-ups, has effectively tripled since Mad Paws listed on the ASX in 2021, raising $12 million at $0.20 per share with an implied market capitalisation of $42.9 million at the time.
This means the share price for the exit is lower than the prospectus raise, but some shareholders like Seven West Media (ASX: SWM) will get back more than they invested.
The board of Mad Paws s unanimously recommends that shareholders vote in favour of the scheme in the absence of a superior proposal, and subject to an independent expert concluding the deal is in the best interests of shareholders.
"Rover and its team have led the way in the pet care space since 2011 and we couldn’t be more thrilled to partner with them," says co-founder, CEO and executive director Justus Hammer.
"Like Rover, Mad Paws has been working to break down the barriers to pet parenthood so that everyone in Australia can experience the joy of having a pet in their lives.
"We're proud of the network of pet lovers we've built over the last decade, and we're excited to tap into Rover’s experience as we continue striving towards our collective goal."
It is understood that Rover's intention is to keep Mad Paws as its own brand based in Sydney with Hammer continuing in the leadership. Rover itself is under new management since the start of this month after COO Brent Turner was promoted to the CEO role, replacing longstanding chief executive officer Aaron Easterly.
"We are delighted by this announcement and look forward to welcoming Mad Paws to the Rover family. The Mad Paws team has done an impressive job scaling to become the leading pet care marketplace in Australia and we’re excited to join forces and help them accelerate the next phase of their journey," says Rover CEO Brett Turner.
"This transaction marks a pivotal moment for Rover’s international growth and underscores our global leadership in the pet care space.
"With a pet market worth approximately $30 billion, Australia represents a significant market opportunity beyond North America and Europe. As we expand globally, we remain focused on seeing and serving the unique needs of every pet and ensuring they’re all met with trusted care.
Mad Paws co-founder Alexis Soulopoulous is a former winner of the Specialist Services category at the Sydney Young Entrepreneur Awards, for which nominations opened this month for the 2025 edition.
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