Investing.com -- Pets at Home Group PLC (LON:PETSP) shares soared 14% on February 26 amid rumors that private equity firm BC Partners was preparing a takeover bid.
Investor chatter on trading forums was fueled by the registration of multiple bid vehicles on February 24, all containing the word “pug” in their names.
These included Pug Bidco Limited and several related entities, which were registered with Companies House on the same day.
The bidcos share an address with BC Partners at 40 Portman Square, and their listed director has the same name as Michael Chang, BC Partners’ New York-based co-head of healthcare.
Chang is linked to the firm’s investment in US pet retailer PetSmart, according to his profile on BC Partners’ website.
Following the speculation, Pets at Home shares jumped to 263p as of 11:48 GMT.
Pets at Home’s share price has faced pressure recently due to an ongoing Competition and Markets Authority (CMA) investigation into the UK veterinary sector.
Investors worry that stricter regulations could impact the industry, but Jefferies analysts believe changes will likely focus on transparency and regulation rather than price controls.
The CMA launched the probe after receiving over 56,000 responses from pet owners and industry professionals, citing concerns over high medicine costs and reduced competition due to consolidation by larger practices.
The outcome of the investigation is important for Pets at Home, as its recent growth has been driven by its veterinary business, which saw like-for-like sales rise 19.9% in the 12 weeks to January 2. Meanwhile, retail revenue declined by 2.8% over the same period.
The latest papers on the CMA’s probe, published on February 6, highlighted concerns that customers have limited choices for veterinary services and noted that prices have increased at a rate exceeding inflation.
But Jefferies analysts pointed out that profit margins in the sector are “largely unchanged,” and said the CMA is unlikely to introduce broad pricing control measures.