WHAT DO YOU THINK OF THIS... PETCO buying DFS

[Rburgee]

Petco is going to buy DR.F&S :/

 

 

http://www.utsandiego.com/news/2014/nov/19/petco-acquire-drs-foster-smith/

Edited November 20, 2014 by Rburgee

[Ryan S]

Not good news. Petco blows.

[surf&turf]

That bites!!

[Squishie89]

Oh boy...

[RW09903]

I've always been a fan of dr Foster and smith. I'll be interested to see if there are any changes with liveaquaria. Also wonder how other online companies like pet solution and that pet place compete.

[Origami]

That's some news. Hopefully they'll keep Live Aquaria as an independently operated subsidiary and not mess with their formula for success.

[Brian Ward]

This can't be good for Live Aquaria. Every time a big company buys a smaller company, they aim to cut costs and it results in a sharp decrease in quality (see every time P&G buys a private dog food label). Information is going to be pretty sparse until the deal actually closes but at this point but anyone have any inside details?

 

http://reefbuilders.com/2014/11/19/breaking-petco-planning-buy-drs-foster-smith-including-liveaquaria/

 

http://www.wausaudailyherald.com/story/news/local/2014/11/19/petco-acquire-drs-foster-smith-rhinelander/19295027/

 

 

[Origami]

Merging similar threads....

[Coral Hind]

It seems backwards to me. I always expected DFS to buy Petco. Hopefully the merger goes so that the DFS's experience and website are used. Petco's site is terrible.

[BowieReefer84]

Post from another forum where they weren't being so understanding:

 

"Greetings,
I would like to take a moment to respond and address some concerns posted in this thread.

Dr. Race Foster and Dr. Marty Smith have worked incredibly hard over the last 31 years, to build an incredibly successful business, which revolves around education, pet heath, and responsible pet ownership. The Petco mission is elevating the lives of animals and enhancing the connection people have with their pets, with a commitment to the highest standards of social responsibility, while continually striving to make things better for pets, people and the planet. Understanding each company’s mission and goals are very similar, we feel this partnership and synergy is going to be beneficial to animals, pet owners, and aquarium hobbyists and enthusiasts alike.

I can assure everyone, my personal mission as the LiveAquaria Director is to take LiveAquaria.com to an even higher level than ever before. The continued expansion of our Aquaculture Coral and Marine Life facility in Rhinelander Wisconsin, home of the LiveAquaria.com Divers Den®, allows us to offer an even greater assortment of quality aquatic life shipped direct to your door.

Rest assured, Dr. Race Foster and I are not going anywhere, and will continue to operate Drs. Foster and Smith pet supplies and LiveAquaria.com as it's business as usual. Both Race and I are incredibly excited for the future and what lies ahead.

Kindest Regards,
Kevin Kohen"

 

Citation, "http://reefcentral.com/forums/showpost.php?p=23272655&postcount=52"

[davelin315]

Don't forget, good things can come from a bigger company buying a smaller one... anyone remember when Flying Fish Express was its own company?  If I'm not mistaken, when Foster and Smith bought it, that's what spawned the birth of liveaquaria (I would guess that the California facility is what was Flying Fish Express).

[howaboutme]

I'm sure Petco is smart enough to know what people are saying about them (bad) and about DFS (good). This could be their way of saying, "we get it" by buying the well-run operation and hopefully not changing much other than having a pile of cash behind them.

[Origami]

Thanks for bringing us the RC thread, BowieReefer. Kevin's a good guy but not exactly an independent, unconflicted voice. Hopefully, at the very least, Live Aquaria - the unit that Kevin directs - is left to operate as an independent subsidiary; to keep doing what they do well  and to use whatever access they have to Petco's massive resources to enhance their investment back into the Live Aquaria business. I have to imagine that LA operates efficiently enough to generate a good return on their investment and, for the Petco shareholder, this acquisition will provide increased profitability over the mid- to long-term. I don't know DFS/LA's particulars, but I can't imagine that this takeover is being driven by a desire to eliminate / absorb competition. Instead, I hope it's to add a new, strong and profit-boosting facet to their corporate portfolio.

[DuffyGeos]

Maybe with the financial backing of Petco (if they leave LA alone) they will be able to increase operations and release 50 -100 new fish everyday instead of the 20-30!!!!

 

We can only hope, or imagine if you could order what fish you wanted and they could give you a WYSIWYG privately!!

[sen5241b]

One of 3 things will happen to LiveAquaria:

 

1) They will sell it off

2) They will shut it down because no one will buy it for what they are asking

3) They will assume they can make a profit off LiveAquaria with low-wage employees who simply follow well defined procedures not realizing that maintaining marine livestock requires expertise and an attention to detail that can't be defined in an employee handbook.

[BowieReefer84]

option 4) They will succeed and grow a larger more successful operation than ever imagined.

[AlanM]

Maybe Marco should approach Petco and see if they're interested in keeping Drs. Foster and Smith and liveaquariua and selling off Divers Den.

[YHSublime]

Don't just jump to doom and gloom! Glad to hear some positives.

 

1 thing is guaranteed: we will have to wait and see.

[Brian Ward]

The not going anywhere comment is odd. Given they've been there for 31 years I give them 5 years to retirement. This looks like cashing out the business to me. I'm sure it will run well for a couple years but when Petco needs to squeeze an extra 50 or 100 basis points of profit out that will be the beginning of the end.

[ctenophore]

But Kevin isn't near retirement, and if things go south at live aquaria, he'll move and start a new la/dd. He's the reason for its success.

[dave w]

I hate to be a pessimist, but I think that this is all about cost of capital.  Petco has a great bond rating which allows it to sell stock or bonds with a very low return, maybe only 2 to 3% in today's market.  That means that they can afford to offer enough buyout money to purchase niche companies like Live Aquaria which may operate on a 5% to 10% profit margin.  The owner's of the niche company get a nice retirement check and Petco expands into markets that are close to it's core business by getting a company that has already been built from the ground up for 10 years and Petco doesn't need to be a pioneer.  

 

On the plus side, they will probably provide a greater variety of lower cost fish to pet stores.

[DuffyGeos]

The not going anywhere comment is odd. Given they've been there for 31 years I give them 5 years to retirement. This looks like cashing out the business to me. I'm sure it will run well for a couple years but when Petco needs to squeeze an extra 50 or 100 basis points of profit out that will be the beginning of the end.

+1 it is an exist strategy......time to cash out. Hopefully they will keep some of the people like Kevin. The other option is that DFS is not only fish, they are huge, they may spin off something like LA since it is so specialized.........Calling Marco.....Calling Marco.

[Brian Ward]

But Kevin isn't near retirement, and if things go south at live aquaria, he'll move and start a new la/dd. He's the reason for its success.

He'll have to raise the capital to start from scratch or try for an LBO of the LA business from PetCo. Either way, he'll be saddled with a ton of debt and have a hard time reaching the scale they have today. He does have the relationships so it's not that starting from scratch isn't possible, but it's a hard road.

[Matt LeBaron]

The response that Petco cares about animals the same way Foster and Smith do just makes me shake my head when I think about the sad state of the fish I see at every Petco I go to and the equipment they have to try and care for them. I just do not see a single upside for the consumer from this deal, especially for those of us that are focused on the aquatic side of things.

[lutz123]

Meh. I really don't care. Our Petco in Leesburg is good. It certainly isn't worth wasting more than a passing thought on. There are plenty of other options if that's not your choice.