CLIENT OBJECTIVES
Foster and Smith, Inc. (“FSI”) is a leading omni-channel retailer of pet supplies and prescription medications. The Company helped pioneer the direct-to-your-door pet products channels, distributing its first catalog in 1983 and launching DrFosterSmith.com and PetEducation.com in 1998.
In 2003, FSI revolutionized the pet healthcare market, introducing a fully-licensed pharmacy to fill prescriptions online or by phone. Seven years later, FSI was one of the first veterinary pharmacies nationwide to receive Vet-VIPPS accreditation.
FSI operates out of a 300,000 sqft corporate campus in Rhinelander, Wisconsin, generating over $200mm of annual revenue and serving approximately 1.5mm unique customers each year.
COMPANY OVERVIEW
Foster and Smith, Inc. (“FSI”) is a leading omni-channel retailer of pet supplies and prescription medications. The Company helped pioneer the direct-to-your-door pet products channels, distributing its first catalog in 1983 and launching DrFosterSmith.com and PetEducation.com in 1998.
In 2003, FSI revolutionized the pet healthcare market, introducing a fully-licensed pharmacy to fill prescriptions online or by phone. Seven years later, FSI was one of the first veterinary pharmacies nationwide to receive Vet-VIPPS accreditation.
FSI operates out of a 300,000 sqft corporate campus in Rhinelander, Wisconsin, generating over $200mm of annual revenue and serving approximately 1.5mm unique customers each year.
CREATING VALUE
FRG was engaged to find a partner and ran a targeted dual-path process, beginning with select consumer-oriented financial sponsors and later introducing strategic acquirers, that positioned FSI as a market leader and “trophy asset” with significant growth potential.
FRG conducted a narrow process to quickly solicit terms from the most likely candidates while limiting FSI’s exposure. The unique opportunity paired with FRG’s approach generated robust market interest, resulting in five chemistry meetings and Letters of Intent that all exceeded FRG’s initial valuation of FSI.
Due to the regulatory environment of FSI’s pharmacy licenses and strategic interest in the Company, FRG managed a substantial due diligence process.
Ultimately, the shareholders decided to proceed with Petco, the second largest pet specialty retailer in the United States. Due to the highly complementary fit between the entities, Petco was aggressive in meeting the sellers’ transaction objectives from a timeline and a valuation perspective. By generating competitive tensions, FRG yielded an industry high transaction multiple and surpassed shareholders’ valuation expectations by more than 2.0x.
FOSTER & SMITH, INC.
We relied heavily on FRG for both market knowledge and transaction experience. They were a critical component in helping us navigate through the complex deal process.
FOSTER & SMITH, INC.
