Warren, Pocan Seek Answers from PE Firm BC Partners Following Reports of Inadequate Working Conditions and Rise in Pet Deaths At PetSmart
Dog Deaths Have More Than Doubled Since BC Partners Acquired PetSmart in 2015
Washington, D.C. - United States Senator Elizabeth Warren (D-Mass.) and Representative Mark Pocan (D-Wis.) sent a letter to BC Partners, the private equity firm that owns PetSmart, regarding reports that cost-cutting measures and mismanagement of the company have endangered the safety of both PetSmart’s workers and pets entrusted in PetSmart’s care.
“We have long been concerned that some private equity funds implement severe cost-cutting measures after acquiring companies, aiming to boost profits for themselves at the expense of workers, consumers, and taxpayers,” wrote the lawmakers. “Given recent reports, we are concerned that BC Partners may have followed – and may continue to be following – the same model.”
In 2015, BC Partners purchased PetSmart for $8.7 billion, the largest leveraged buyout of the year. According to a new report by United for Respect, PetSmart’s acquisition was accompanied by mismanagement and significant cost-cutting. During the COVID-19 pandemic, as pet adoption boomed and customer traffic at PetSmart stores increased, PetSmart lacked safety precautions and refused to grant hazard pay to employees. At the same time, they cut staffing and increased employee workloads. A recent investigation found that dog deaths have more than doubled since BC Partners acquired PetSmart.
Meanwhile, BC Partners appears to have followed the private equity playbook to line its pockets. Immediately following its acquisition, PetSmart returned an $800 million dividend to its new owners, allowing BC Partners to recoup nearly 40% of its initial acquisition cost within ten months of the deal. In the middle of the pandemic, BC Partners also took steps to split PetSmart and Chewy, the more profitable online pet retailer, and transfer all of PetSmart’s shares in Chewy – valued at $26 billion – to themselves.
In the letter, the lawmakers asked the firm to disclose documents and information required in Sections 501 and 503 of her bill, the Stop Wall Street Looting Act, and to explain the steps it has taken and plans to take to address public health gaps and reported rise in pet deaths at PetSmart facilities by November 19, 2021.
Senator Warren is leading the fight to end abusive private equity practices. Last month, she reintroduced the Stop Wall Street Looting Act, comprehensive legislation that would reform the private equity industry by holding private equity firms liable for the responsibilities and debts of companies under their control and increase transparency by requiring private equity managers to disclose fees, returns, and other details about their funds. She also chaired the first hearing in the Senate focused solely on private equity, in which she highlighted the consequences of private equity and called for reforms to put workers and communities first.
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