Woolworths has announced a majority stake in Petspiration Group for $586 million, at an EV/EBITDA of 11x. This is a full price, particularly given Woolworths will deliver the majority of the synergies. We are concerned that industry-wide revenue may recede given the COVID-19 pet boom added more than 2.5m dogs and cats to households. Woolworths is building out its “ecosystem” and Petspiration is a natural extension. However, the more important share price driver is Australian Food, which needs to demonstrate that previous capex is delivering a return on investment.