Equity Firm Bids on BJ’s Wholesale Takeover

Natik, MA—Consumers shop BJ’s Wholesale Club for off price bargains, now a couple of equity firms hope to buy the wholesale club retailer for an estimated $3.1 billion.

In a filling Friday with the Securities & Exchange Commission, Leonard Green & Partners and CVC Capital Partners said they are prepared to buy BJ’s but didn’t reveal  the bid amount. While The New York Post reported the bid was between $50 and $52 a share an “acceptable price” but not an “overwhelming offer,” Bloomberg News today said the bid was likedly $53 to $57 a share, “based on valuations of comparable retailers and the price Leonard Green agreed to pay for 99 Cents Only Stores in March.

BJ’s put itself up for sale in February after announcing its was closing five stores and eliminating 500 jobs.

Private Equity Owners Could Expand The Club Nationally

Neither company responded to the offer reports and BJ’s Wholesale still has to respond to their offer.

Leonard Green, which had previously expressed interest in acquiring BJ’s—even in a hostile takeover, is already the company’s largest shareholder with 9.3% stake in its stock.

Based in Los Angeles, Leonard Green has been an active player in retail investments. The firm partnered with TGP Capital to buy J. Crew and in December purchases Jo-Ann Stores. Leonard Green also has investments in Container Store, David’s Bridal, Neiman Marcus and Whole Foods.

CVC, located in London, has more international retail holdings including C1000, a supermarket in Netherlands; Matahari Department Stores in Indonesia; and Cortefiel, an apparel retailer in Spain.

Retail analysts said that taking BJ’s could help the store expand beyond the Northeast and Southeast, where it has about 185 stores. Nationwide, it ranks No. 3 behind much larger Costco Wholesale Corp., and Sam’s Club.

In the past, especially under former CEO Herbert Zarkin, BJ’s was resistant to a sale, particularly to Leonard Green. But Leonard Green began building a stake in the BJ’s after Zarkin retired last year, and, in July, announced that it wanted to engage BJ’s in buyout talks.

According to Bloomberg data, BJ’s is currently the cheapest U.S. discount retailer with at least $500 million in market value. On a per-share basis, the warehouse chain trades at 0.22 times its revenue of $11.2 billion in the past 12 months.

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