No mega-deal after all

The mega-merger in the US pet supplies sector that was heralded by the media is not now likely to happen. The two pet supplies giants in the USA, Petco and PetSmart, have called off negotiations once again regarding the acquisition of Petco by its fiercest competitor. Media reports cite the difficulties posed by such a deal with regard to anti-monopoly legislation. According to experts, a merger between the two chains would have resulted in coverage of the American pet supplies market of around 30 per cent and accounted for 50 per cent of all expenditure by Americans on their pets.
People in the business are sure that a combined PetSmart-Petco might eliminate stores anyway as part of any merger deal. About half of existing Petco stores are within a three-mile radius of at least one PetSmart, while 72 per cent are within five miles, the retail investment analyst Howard Davidowitz said on Bizjournals.com. He is also sceptical of a merger because of the "gigantic" amount of debt a combined company would have.