After looking at Petco (NASDAQ:PETC) and Motley Fool Stock Advisor selection PetSmart (NASDAQ:PETM) recently, I came away thinking that Petco was the more undervalued of the two specialty pet product companies. However, I have to admit that I did not see today's buyout offer announcement coming.

Petco will be providing more information in an SEC filing today, but as of right now we know the company is being acquired for $29 a share in cash, or approximately $1.8 billion in total, by Texas Pacific Group and Leonard Green & Partners. The offer is a 49% premium to yesterday's closing price and the shares are up 43% on the news. Not a bad one-day move at all, I'd say!

Assuming the deal goes through at $29, which looks likely given the board of directors' blessing, Petco is being sold for approximately 12 times its trailing-12-month operating cash flow, 7.6 times trailing EBITDA, and 0.8 times trailing sales. Applying the same multiples to PetSmart yields a valuation of $3.2 billion to $3.4 billion, and PetSmart is up 6% today on the news and trades at a market cap of $3.49 billion. That's a slight premium, but PetSmart has traditionally performed more consistently and at a slightly higher level of profitability than Petco.

It's hard to argue with such a large, quick premium if you're a Petco shareholder. However, I think these two businesses have a fair amount of growth ahead of them, as they become the Best Buy (NYSE:BBY) and Circuit City (NYSE:CC) of the big-box pet products world. That said, I think the two private equity firms have wrapped up a nice long-term deal for themselves as well. Petco and PetSmart have shown signs of struggling because of high fuel prices. But as both have still grown in absolute terms and on a same-store sales basis, there is reason to think the malaise is temporary.

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At the time of publication,Nathan Parmelee owned shares in PetSmart, but had no financial interest in any of the other companies mentioned. The Motley Fool has an ironclad disclosure policy.