The owner of Pet Brands and Vital Pet Group has mooted a potential IPO or major fundraise after a spate of acquisitions that move it closer to a £200m sales target.
Family-owned Paramount Retail Group has acquired four online pet retail brands – Fetch, Medic Animal, Pet Supermarket and Pet Meds – from Paws Holdings in a pre-pack administration deal.
The four brands, including the Fetch DTC brand Paws bought from Ocado in January 2021, generated a combined turnover of £50m in 2021. They join a number of other pet-focused businesses owned by Paramount – which also owns majority stakes in lifestyle company Dibor and confectionery businesses Bristows of Devon and Crawford & Tilley.
Paramount said the acquisition solidified its position as a major player in the pet sector.
The deal represented a significant step forward in its strategic aim of becoming a £200m revenue group within 12-18 months, it said, having already hit £100m with this latest deal.
“This acquisition demonstrates our ability to move quickly in a volatile business environment,” said Paramount director Ravi Sharma.
“We have a particularly strong board with key skillsets around the generation of price to earnings enhancing investment acquisitions.
“We are presently funding our growth organically, however as we move forward there may be a need for us to attract further finance, or given our ability to produce shareholder value, consider an IPO.”
The acquisitions made by Paramount encompass businesses and assets of Speciality Stores, Kokoba and Bob & Lush, which entered administration via FRP Advisory on 1 February.
Administrator documents show Paramount paid £280k for the pet businesses and has taken on 50 staff members under TUPE rules.
FRP said loss-making Paws Holdings and subsidiaries had traded at low margins, funded by raising additional capital.
The addition of Ocado’s pet business incurred further costs, which led to increased operating losses.
The group failed to meet performance criteria to enable it to draw down additional funding and was eventually unable to secure financing to plug this funding gap in December, leading to the eventual pre-pack administration.
Paramount chairman Paul Taylor told The Grocer the group was confidence it can turn the business profitable within “a relatively short time period”. “This process is not new to us and we are relative experts in this field,” he added.
He said the group’s “core focus” now lies within the rapidly expanding pet sector.
To back this growth it has purchased a 100,000 sq ft warehouse facility in Rotherham, which will “afford us fast integration of additional acquisitions whilst facilitating further organic expansion, without the usual burden of space limitations”.
“We are becoming one of the most significant pet sector providers in the UK with immediate plans to push geographical boundaries into Europe, an opportunity triggered by this acquisition,” he said.
“We are also enhancing our vertically integrated business model within the pet sector, having a significant presence as a designer, developer, manufacturer in addition to a national wholesaler distributor.”
Paramount’s Sharma suggested the group could make further acquisitions to accelerate its growth, noting that it could also seek opportunities outside the pet sector to “mitigate business risk and vulnerability to a single sector environment”.