Quarterly Pet Industry Report – Q3 2010

Pet Deal Activity – Q3 2010
Pet Industry Highlights

Mergers and acquisitions within the Pet Industry continued to show strong volume and healthy deal multiples for the third quarter
of 2010. As medium and large strategic buyers in the sector look to employ cash reserves and financial buyers seek recessionresistant
investments we expect to see continued, and growing, demand for manufacturers, distributors and retailers within the
Pet Industry. SDR expects deal multiples to remain favorable for niche players and for strong financial performers as the supply of
qualified pet companies for sale falls short of the demand. As fallout from the supply/demand inequity, buyers will look deeper
into the candidate pool and we expect to see pet companies without a defensible niche and without strong financial performance
will begin garnering attention from active buyers.

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Mergers & Acquisitions: Phillips Feed and Pet Supply buys Super-Dog Pet Food

Date: October 7, 2010

Seller: Super-Dog Pet Food

Buyer: Phillips Feed and Pet Supply

Price: undisclosed

Terms: Leveraged Buyout

Super-Dog Pet Food sold to Phillips Feed for an undisclosed amount. Phillips Feed and Pet Supply is a distributor of pet foods and supplies, animal feeds and wild bird food. The move is expected to increase Phillip’s product offerings and support anticipated sales growth.  Phillips hopes that the deal will allow their customers to keep their inventories more manageable on a wider range of products while offering increased support.

“This acquisition will provide customers in the independent pet specialty market a best-in-class distribution network focusing on customer service and satisfaction,” Phillips Feed and Pet Supply said in a written statement. “The integration of these two operations will combine the best practices of both organizations to form a strategic alliance with the vendor, distributor, retailer and their consumers.”

“The new company’s mission is to continue to aggressively support the independent pet channel. Future plans include increased sales support, ease in ordering, and expansion within the current catalog of products.  Also the new company will be exploring the opportunity for more frequent deliveries to customers. The goal is to allow retailers to keep their inventories more manageable on a wider variety of products while maintaining a more profitable balance sheet.”

Philips Feed and Pet Supply has facilities in Easton, PA; Lakeland, FL and Spartanburg, SC. Super-Dog Pet Food operates two facilities in Taunton, MA and Leola, PA.

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Mergers & Acquisitions: Xena Care Holdings buys EstraPet

Date: October 6, 2010

Seller: EstraPet

Buyer: XenaCare

Price: undisclosed

Terms: Leveraged Buyout

Xena Care Holdings, a manufacturer of consumer healtcare products, acquired EstraPet in a unique attempt to enter the pet market.  EstraPet is a highly specialized niche company that produces pet products intended to offset hormonal issues. This can happen quickly due to the spaying or nuetering of pets. Health issues include muscle and bone loss, loss of brain and bladder funtion and cardiovascular and periodontal problems.

XenaCare reported that it has acquired all rights to EstraPet from inventor Dr. Phil Schoenwetter. The deal includes the product trademark, pending patent application and the web domain www.EstraPet.com.

Director of sales and marketing for XenaCare said that the company plans to change the product from a biscuit to a pill, which can be added to pet food. In her opinion, a pill is easier for pet owners to store and administer. The product is expected to be available to pet retailers by January of 2011.

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