Rover Group, Inc. agrees to acquisition by private equity funds managed by Blackstone

SEATTLE, November 29, 2023 – Rover Group, Inc. (Nasdaq: ROVR), the world’s largest online marketplace for pet care, announced today that it has entered into a definitive agreement to be acquired by private equity funds managed by Blackstone, the world’s largest alternative asset manager. Rover is valued at approximately $2.3 billion in the all-cash transaction.

Under the terms of the agreement, Rover stockholders will receive $11.00 per share in cash, representing a premium of approximately 61% to the volume-weighted average share price of Rover’s Class A common stock over the 90 trading days ending on November 28, 2023.

“We are thrilled for this next chapter in the Rover story and look forward to the partnership with the Blackstone team, who share our conviction, excitement, and strategic vision,” said Aaron Easterly, co-founder and CEO of Rover. “Blackstone brings deep expertise in partnering with innovative technology companies, and with their support and collaboration, we plan to continue investing in our business in service of our mission to make it possible for everyone to experience the unconditional love of a pet in their lives. This transaction delivers immediate and compelling value to Rover stockholders and is a testament to the commitment and hard work of our team and an exciting milestone for Rover.”

Sachin Bavishi, a Senior Managing Director at Blackstone, said, “We are excited to partner with Aaron and the exceptional Rover team, whose vision, creativity, and data-driven approach have built the Company into an industry leader. Our investment highlights Blackstone’s high-conviction focus on backing rapidly growing digital businesses and supporting talented entrepreneurs with extensive resources to take advantage of transformational growth opportunities. We look forward to working with Rover as they continue working to drive innovation for pet owners and providers.”

Tushar Gupta, a Principal at Blackstone, added, “We believe Rover has a significant runway for growth as pet owners increasingly place a premium on high-quality care, flexibility and convenience. We look forward to partnering with management to build upon their leading online marketplace and leveraging Blackstone’s extensive expertise and resources to support the Company’s continued expansion as a private company.”

Company History

Rover was founded in 2011 in Seattle, Washington, by Greg Gottesman, Aaron Easterly, and Philip Kimmey and was part of the startup accelerator Madrona Venture Labs. The initial concept for Rover was conceived during a Startup Weekend event focused on pet projects and ideas. In the early stages, the company raised over $300 million in funding from investors, including Madrona Venture Group, Menlo Ventures, and Petco.

Gottesman was an established Seattle-based startup investor and advisor before founding Rover. He worked for the VC firm Madrona Venture Group where he led investments in companies like Amazon and was on the boards of Farecast (acquired by Microsoft) and Decide (acquired by eBay). His experience in the startup world was key in guiding Rover’s early strategy and growth.

Easterly previously founded Seattle-based startup Wetpaint, a media/entertainment website. He sold the company in 2013. At Wetpaint, Easterly gained valuable experience building online platforms and communities to connect consumers. That knowledge directly translated to defining Rover’s pet services marketplace model.

Meanwhile, Kimmey brought critical technical skills to the founding team. He previously worked as a Lead Software Development Engineer at Microsoft. His engineering experience allowed him to architect Rover’s website and apps in his CTO role at Rover.

With Gottesman’s startup mentorship, Easterly’s consumer web expertise, and Kimmey’s engineering chops, the trio made for an ideal founding team to create a disruptive platform like Rover in the vast pet care industry. Their varied backgrounds and complementary skillsets were crucial to forming Rover’s vision and strategy in the early days. After founding Rover in 2011, they spent over two years refining the concept and testing the market before officially launching in 2013.

Aaron Easterly (left) Philip Kimmey (right) Photos: Rover Group, Inc.                                                                                                         

Easterly and Kimmey remain actively involved in leading Rover today, while Gottesman is no longer directly part of the company’s day-to-day executive leadership team.

Easterly currently serves as the CEO of Rover. As CEO, Easterly oversees the company’s strategic growth and Rover’s vision to transform the pet care industry through technology and innovation. Kimmey continues in the CTO role at Rover, leading the engineering team in building the product and technical infrastructure to power Rover’s online marketplace. After guiding Rover’s founding and initial financing rounds, Gottesman is no longer involved in day-to-day operations. Gottesman initially helped incubate Rover as part of the startup studio Madrona Venture Labs, where he was a managing director. However, he has shifted focus back solely to venture capital activities. However, Gottesman remains on Rover’s board as a director representing Madrona Venture Group, which continues to be a significant investor.

Rover was created to provide an alternative to relying on friends, family, neighbors, and/or boarding facilities for pet care when traveling away from home. The concept for Rover reflects the personal experiences of the founders. Easterly watched his dogs struggle with separation anxiety and boredom while he was busy founding his first startup. That inspired him to envision creating some form of pet care service. Kimmey worked at a local Seattle pet services company doing weekend dog walking to make extra income while attending the University of Washington for his computer science degree. This first-hand experience exposed issues pet sitting companies faced matching demand with qualified walkers/sitters.

The vision focused on making it easy for pet parents to discover, book, re-book, pay, and review pet care providers online through its platform and mobile app. Rover eliminates many of the barriers to pet ownership, enabling the company’s mission to make it possible for everyone to experience the unconditional love of pets.

Over the years, offerings on the Rover platform have grown to include five core services addressing daytime and overnight needs. From its inception through September 30, 2023, over 93 million services have been booked by more than 4 million pet parents on Rover, with more than 1 million pet care providers participating across North America and Europe.

Financial Background

Rover went public via a SPAC merger with Nebula Caravel Acquisition Corp in July 2021 at a $1.35 billion valuation. 2021 annual revenue was $109.84M with an operating loss of -$17.16M. Prior to going public, Revenue had peaked at $95.05M for fiscal year 2019. The impact of the COVID pandemic on Rover’s business was dramatic as lifestyle changes reduced demand for the company’s services. Revenue for 2020 dropped precipitously to $48.8 million – a near 50% decline. Revenue quickly snapped back, post-pandemic, to $109.84M in 2021.

Rover Group revenue grew to $217.80M in the twelve months ending September 30, 2023, with 36.07% growth year-over-year. Revenue in the quarter ending September 30, 2023 was $66.20M with 30.16% year-over-year growth.

While Revenue has grown rapidly, the company has not achieved profitability for a fiscal year. Nominal positive profitability has been posted in some recent quarters.

Rover’s partnership with Blackstone reflects a shared belief in the industry’s future growth potential and long-term vision to build on Rover’s leadership position in the market. Blackstone’s investment aims to help Rover accelerate investment priorities, expand its global footprint, and fuel expansion initiatives.

Transaction Terms

The merger agreement includes a customary 30-day “go-shop” period expiring on December 29, 2023. During this period, Rover and its advisors can solicit, consider, and negotiate alternative third-party acquisition proposals. The Rover board of directors will have the right to terminate the merger agreement to enter into a superior proposal, subject to the terms and conditions of the merger agreement. There can be no assurance that this “go-shop” process will or will not result in a superior proposal. Rover does not intend to disclose related developments until it determines that such disclosure is appropriate or otherwise required.

The transaction is expected to close in the first quarter of 2024, subject to the approval of Rover’s stockholders and the satisfaction of required regulatory clearances and other customary closing conditions. The Rover board of directors approved the merger agreement and recommended that Rover stockholders approve the transaction and adopt the merger agreement. Closing of the transaction is not subject to a financing condition.

Upon completion of the transaction, Rover’s Class A common stock will no longer be publicly listed and Rover will become a privately held company. The Company will continue to operate under the Rover name and brand.