Animal product supplier Petco is set to join a long list of retailers being bought by private equity firms. The $2-billion-a-year operation has entered an agreement with Leonard Green & Partners LP and Texas Pacific Group for a $1.68-billion buyout. The transaction price of $29 per share represents a premium over Petco's $19.45 stock value at the time of the sale.

The company, the second largest retailer in the animal product sector behind PetsMart, suffered minor setbacks in 2004, but has been able to rebound in 2005 with a 10.2 percent increase in sales.

Petco has been a stable performer, but has been hurt by competition, including from Wal-Mart Stores Inc. and other discounters. Most observers expect that the buyers will eventually attempt to take the company public again, much as they did the first time they bought Petco.

The same two firms purchased Petco in 2000 for about $22 per share in a transaction valued at $600 million, including debt. Two years later, the firms took Petco public, in a nearly $900-million offering, posting a total return of $275 million for the companies.

Taking companies private and then public again has been the companies' strategy with other retailers as well.Texas Pacific bought clothing retailer J. Crew in 1997. More recently, TPC purchased upscale department store chain Neiman Marcus for $5.1 billion in a joint venture with Warburg Pincus.

Petco owns 779 stores in 47 states and Washington, D.C., most of them involving 15,000-square-foot spaces positioned in neighborhood shopping centers and well-known retail hubs, with 10- to 15-year lease terms.