PetSmart reviewing changes to its capital structure with goal of returning more money to shareholders, following news last week that hedge fund Jana Partners has acquired 9.9% stake

Cindy Allen

July 7, 2014 (Bloomberg LP) – PetSmart Inc., which is under pressure from hedge fund Jana Partners LLC to pursue strategic alternatives, said it’s reviewing changes to its capital structure, aiming to return more money to shareholders.

There is no assurance that the review will lead to any actions and the timing of potential changes is uncertain, the pet-supply retailer said in a filing today.

Jana, a $10 billion firm run by Barry Rosenstein that’s known for pushing corporate managements to make changes, acquired about 9.9 percent of Phoenix-based PetSmart in stock and options, according to a regulatory filing last week. It said it was pursuing discussions with management, the board and other investors.

PetSmart needs to improve operating performance and capital allocation and return “significant” capital to shareholders, Jana said. The fund also called on the company to improve disclosures and the composition of management and its board.

Jana’s filing sent shares of PetSmart up 13 percent to $67.28 on July 3, the biggest one-day gain since May 2012.

To contact the reporter on this story: Nick Turner in New York at nturner7@bloomberg.net To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Niamh Ring

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