Warren Admonishes BC Partners as It Weighs PetSmart SPAC Deal

(Bloomberg) -- Senator Elizabeth Warren criticized a reported plan to take BC Partners’ PetSmart public through a blank-check company, saying the deal heightens previous concerns about the retailer and the process.

BC Partners is mulling taking the pet supply retailer public through a special purpose acquisition company backed by private-equity firm KKR & Co. in a deal valued at $14 billion including debt, Bloomberg reported last month.

Warren expressed earlier concerns about BC Partners’s stewardship of PetSmart after a report by advocacy group United for Respect said safety and working conditions had deteriorated since its $8.7 billion leveraged buyout, then the largest in retail.

“BC Partners’ inability to provide answers about how PetSmart treats their workers, and the pets entrusted in their care, has escalated my concerns about the private equity firm’s disregard for worker safety as they seek ever-higher profits,” Warren said in a Monday statement. “In light of recent reporting that a private equity-backed SPAC is considering purchasing PetSmart, I remain concerned that workers are yet again going to get the shaft in this deal.”  

Warren (D-MA) and Representative Mark Pocan (D-WI) wrote to BC Partners Chairman Raymond Svider in early November, seeking information about the treatment of workers and pets. Svider responded a couple weeks later. 

“PetSmart has always placed the utmost importance on the health and safety of its associates,” he wrote in a Nov. 19 letter to Warren and Pocan. Svider said BC has invested more than $1 billion in the company since acquiring it in 2015 and made a “significant reduction” in its debt. 

He added that the company had also spent more than $178 million for bonuses, higher wages and other benefits since the beginning of the pandemic and installed new safety protocols and cameras in its boarding and grooming facilities. Wages now average more than $15 an hour and its pet care is “best in class,” he wrote. 

“The truth is that PetSmart’s pet care standards have never been higher and PetSmart continues to raise the bar,” he wrote.

A spokesperson for BC Partners didn’t immediately respond to requests for comment from Bloomberg News.

Private equity has been a focus for Warren, including treatment of workers at bankrupt sponsor-backed retailers. The plight of workers at bankrupt Toys ‘R’ Us who didn’t receive expected severance payments help prompt the introduction of the Stop Wall Street Looting Act in 2019 and to reintroduce it last year.

The measure would elevate worker claims in bankruptcy as well as bar dividends and layoffs in the first two years after an acquisition to prevent excessive debt and cost-cutting that could harm companies and their employees.

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