2 hospital networks find new owners
TSG Consumer Partners will pay at least $2 billion for Pathway Vet Alliance, while VitalPet is saved from bankruptcy by Destination Pet.
Pathway Vet Alliance, which operates more than 240 general, emergency and specialty hospitals in 35 states, is being sold to TSG Consumer Partners in a deal valued by media outlets at $2 billion to $2.65 billion.
The transaction, which has not been publicly acknowledged by Pathway, TSG and seller Morgan Stanley Capital Partners, came days before another veterinary hospital chain, VitalPet, was rescued out of bankruptcy court.
Pathway’s new owner, TSG, invests in consumer brands such as Pabst Blue Ribbon beer and the Planet Fitness chain. It also controls Radio Systems Corp., the seller of Invisible Fence pet containment systems and PetSafe pet supplies.
Morgan Stanley Capital Partners bought Pathway in 2016 and financed the Austin, Texas, chain’s expansion, adding 79 locations in 2019 alone.
Whether Pathway’s current leaders will stay with the company is unclear. They include co-founder Jasen Trautwein, DVM, and CEO Stephen Hadley, DVM.
In other news, Destination Pet, the owner of 28 pet services and veterinary care locations in 14 states and the District of Columbia, agreed to buy VitalPet for $47 million.
VitalPet, which runs 24 veterinary clinics in seven states, filed for bankruptcy protection in October 2019 in Texas.
“This acquisition is a significant step in our growth strategy,” said Shane Kelly, CEO of Destination Pet, which in addition to boarding, day care and grooming facilities also owns several veterinary hospitals.
The company is headquartered in Highlands Ranch, Colorado, and is a property of the investment firm L1 Health.
Douglas J. Brickley, VitalPet’s chief restructuring officer, said he was “very pleased with the results of the sale process.”
“It is a great result for doctors, employees, creditors and equity holders,” Brickley said.
“Moreover, to consummate a sale of this magnitude, in the current world economic climate, and after VitalPet was thrust involuntarily into Chapter 11, is nothing short of miraculous.”
Okin Adams LLP served as legal counsel, Wick Phillips LLP as transaction counsel, The Claro Group as financial advisor and Gordian Group LLC as investment banker to VitalPet.
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