14 DAY TRIAL // PetSmart has agreed to a massive deal, so massive that it is considered to be the biggest e-commerce acquisition in history. The company will be paying $3.35 billion for the fast-growing pet food and product site Chewy.com.
According to ReCode, the deal is bigger than Walmart's acquisition of Jet.com last year, for which the company paid $3.3 billion. This purchase is that much larger when you take into consideration that PetSmart's value was around $8.7 billion back in 2015 when private equity investors took it over.
The deal, however, makes sense because Chewy.com is one of the fastest-growing e-commerce sites in the world. Only last year it managed to rack up nearly $900 million in revenue and it has only been operating for five years. Wall Street expects that it will soon go on the stock market, but that has yet to be confirmed.
Chewy was founded in 2011 and it quickly became known for its great customer service, as well as the large selection of products and fast shipping.
Largest deal of its kind
PetSmart announced that it was looking to buy Chewy on Tuesday morning, but did not disclose any price. Sources close to the deal, however, put the extraordinary price tag for the acquisition.
While Walmart's acquisition of Jet.com last year was a huge deal, it's just a fraction of what Walmart is worth. For PetSmart, this is a massive move and it's one they must have wanted badly if they agreed to pay so much for a site, even a successful one. The deal also falls in line with the trend among brick-and-mortar retailers who try to enter into e-commerce but are reluctant to build it up from scratch, so they decide to purchase an already-established business for this purpose.
It remains to be seen just what PetSmart is planning to do with Chewy and whether or not any changes are coming for the online shop.