T.H. Lee cleared to buy AEA’s Phillips Pet food in midst of fundraising effort

T.H. Lee received clearance from the Federal Trade Commission to buy the company from seller AEA Investors Small Business Fund II LP, a pool managed by New York-based AEA Investors, according to a filing.

The listed buyer on the deal is Thomas H. Lee Equity Fund VI, the vintage 2007 pool from the Boston firm, which raised about $9 billion.

Phillips, a pet food distribution shop based in Easton, Pa., was valued at more than $500 million in the buyout deal, according to a report last year by sister publication Reuters. That enterprise value would put it near the lower end of T.H. Lee’s sweet spot of deals ranging between $250 million and $2.5 billion, according to the firm’s website.

A GP at a small-to-mid-market buyout shop told Buyouts that private equity firms are keen to do deals in the pet business, which has been boosted by empty nesters spending heavily on cats, dogs and other animals for health care, grooming, accessories and health insurance.

Americans spent an estimated $55.5 billion on their pets in 2013, up from $53.3 billion in 2012, according to the American Pet Products Association. Food comprises the biggest component in the industry by far, with estimated sales of $21.3 billion in 2013.

AEA disclosed $144 million raised and a target of 250 million for its AEA Investors Small Business Fund II, according to a Form D filing from March 2, 2010. Small Business Fund II targets deals that are smaller than the firm’s main buyout fund.

Founded in 1968 to make investments on behalf of S.G. Warburg & Co. as well as the Rockefeller, Mellon, and Harriman families, AEA closed AEA Investors Fund V at about $2 billion last year.

AEA made its initial investment in Phillips Pet Food in 2010. The company, which has been family owned and operated since 1938, runs 12 distribution centers across the U.S.