Sponsors: Leonard Green & Partners, CVC Capital Partners
Target: BJ’s Wholesale Club Inc.
Price: $2.8 billion
Seller: Public shareholders
Private equity firm
Leonard Green and its affiliates, which also reported a 9.3 percent stake in the retailer in a regulatory filing, however, did not disclose the financial terms of the proposal. The news comes after the New York Post reported, citing sources, that the two firms could make a joint buyout offer for BJ’s Wholesale valuing the retailer at about $2.8 billion.
“A deal makes sense. BJ’s does need to remove themselves from the public market to expand on the East Coast,” Wall Street Strategies analyst Brian Sozzi told Reuters. “I can make a case the valuation could be close to $57-$58 a share. You realistically could see that price. And that would be a very good price,” Sozzi added. At the upper end, Sozzi’s estimate values the company at about $3.2 billion.
There has been a lot of private equity interest in the Westborough, Mass.-based company after its board decided to explore a sale and other alternatives in February.
BJ’s declined to comment on the matter, saying it will not provide any update until it concludes its strategic review. Leonard Green and CVC Capital Partners could not be immediately reached for comment.
A deal would be the latest in Leonard Green’s retail buying spree. The private equity firm, which already owns Jo Ann Stores Inc and upscale apparel retailer J. Crew, has partnered with the Schiffer-Gold family to bid for 99 Cents Only Stores .
Cheap valuations and extensive real estate assets have made discount and dollar stores attractive targets for other players and private equity firms. BJ’s Wholesale is the third-largest wholesale club retailer behind Costco Wholesale Corp and Sam’s Club, a unit of Wal-Mart Stores Inc.
Wholesale clubs charge customers a membership fee, in return for which they can shop for deals on large quantities of everyday items like food and toilet paper. In March, Leonard Green & Partners said it was evaluating whether to buy BJ’s and had entered into a confidentiality agreement with the company.
(Viraj Nair is a correspondent for Reuters in Bangalore.)