PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
Peapod Inc., the top online grocer, suffered a blow Thursday when investors withdrew an offer of $120 million in badly needed financing. The canceled delivery, blamed on the sudden departure of Peapod CEO Bill Malloy, sent the grocer's stock into a free fall.
Peapod, which has steadily lost money since its 1989 inception, despite building a customer base of 100,000 in eight metropolitan markets, had counted on the financing to foot ambitious expansion plans. Last year, Peapod lost $28.5 million on revenue of $73.1 million.
Without the funding, the Skokie, Ill.-based company says it has only about $3 million cash on hand. Peapod says it has instructed its board of directors to consider a possible sale as well as alternate financing.
The investors' defection came after Malloy informed the company he could not continue as CEO and president due to health reasons. Andrew Parkinson, Peapod's chairman and co-founder, has assumed the chief executive's duties, assisted by a newly formed office of the chairman.
``They need a cash infusion quickly in order to survive,'' says Barry Stouffer, an analyst for J.C. Bradford & Co. in Nashville, Tenn. "This industry is attracting a lot of capital, and if they had the luxury of having six months to get it, I'm sure they could. Whether they can do it in three or four weeks, I don't know.''
Peapod had announced the $120 million in financing on Feb. 14, trumpeting that it had obtained letters of intent from Apollo Management, The Yucaipa Companies, Pequot Capital Management and GRP II. At the time, Yucaipa's Ronald W. Burkle called Peapod "the best Internet grocery opportunity I've seen.''
Other online grocers are struggling, too. Peapod rival HomeGrocer.com Inc. went public last week, but the reception from Wall Street was less than enthusiastic. Its shares traded near the $12 offering price, while rival Webvan's shares have recently slipped below its $15 IPO price.