(Bloomberg) -- Rover Group Inc., an online marketplace in the fast-growing market for pet-care services, soared after agreeing to be acquired by Blackstone Inc. in a $2.3 billion all-cash deal, the companies said Wednesday.

The pet economy exploded during the pandemic as locked-down Americans adopted cats, dogs and other animals. But now, with stubborn inflation for basic goods including those in the pet category, many owners are finding it increasingly expensive to care for their animals. NIQ data from October shows that pet-care retail prices were up about 6% from last year, higher than overall inflation rates.

Blackstone is paying $11 a share for the dog-walking and pet-sitting company, a premium of about 61% to its average price in the 90 trading days ended Tuesday. The deal, expected to to close in the first quarter of 2024, carries a 30-day “go-shop” period expiring Dec. 2.

Rover’s shares surged as much as 31% to $11.10 after the announcement, the biggest increase on record. 

Seattle-based Rover went public through a merger with Nebula Caravel Acquisition Corp., a special purpose acquisition company sponsored by San Francisco-based True Wind Capital, in August 2021. Valued at about $1.35 billion, Rover was among a flood of companies to list through the so-called de-SPAC process at a time when venture capitalists and hedge funds sought quick returns amid low interest rates.

Read More: Dog-Walking App Booms as Workers Return to the Office and Travel

Now, as rates have surged, companies that merged with SPACs have become prime buyout targets for cash-rich private equity firms seeking bargains and which are eager to return capital to their limited partners.

Blackstone’s deal for Rover follows its $4.6 billion acquisition of Cvent Holding Corp., a provider of event management software, which closed in June. Cvent had merged with special purpose acquisition company Dragoneer Growth Opportunities Corp. II in 2021 at a $5.3 billion valuation.

Elsewhere in the pet industry, Petco Health & Wellness Co.’s shares tumbled as much as 21% Wednesday after it reported third-quarter sales and earnings that missed analysts’ estimates. The retailer said it’s navigating a challenging consumer environment and going through an operational reset to appeal to pet owners more broadly and better manage costs. 

Goldman Sachs, Centerview Partners are financial advisers for Rover. Evercore and Moelis & Co. are financial advisers to Blackstone. 

--With assistance from Leslie Patton.

(Updates with additional details and third and seventh paragraph.)

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