Petco and PetSmart are the two largest pet retailers in the United States: about 50% of all money spent in pet stores nationwide goes to one of the two chains. The two companies have given each other a good sniff and considered merging in the past, but after some changes of ownership are considering it again.

Last year, PetSmart, formerly a publicly-traded company, sold itself to a group of investors for $8.7 billion. Petco, meanwhile, is also owned by a private-equity firm, and the company recently filed for an initial public offering of stock. However, sources involved in the deal tell Reuters that the companies have started preliminary talks about getting together to form one big mega-pet store chain.

One concern as the companies keep sniffing is how much confidential information the two companies might share with each other. Last year, PetSmart’s leadership didn’t go forward with merger talks because they assumed regulators wouldn’t approve such a merger. While there are antitrust concerns about a rather similar big-box merger between OfficeMaxDepot and Staples, it seems more plausible. It may be too soon for such a deal, though: PetSmart’s deal to go private only closed in March, and they may not be ready to acquire their biggest rival.

Exclusive: Petco begins merger talks with PetSmart – sources [Reuters]

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