Private equity firms to take over BJ's Wholesale

NEW YORK— BJ's Wholesale Club is being acquired by two private equity investors for roughly $2.8 billion in a widely expected deal.

The nation's third-largest wholesale club said Wednesday that Leonard Green & Partners and CVC Capital Partners will pay $51.25 per share in cash for BJ's common stock. That's a 6.6 percent premium over Tuesday's closing price of $48.08.

The two private equity firms disclosed the bid earlier this month, though the value was undisclosed at the time. BJ's said in February it was exploring a sale. Analysts say the takeover could help propel its growth.

BJ's said its board unanimously approved the buyout and is recommending that shareholders vote for it.

The deal is expected to close during the fourth quarter.

Shares of BJ's Wholesale Club Inc. jumped $2.27, or 4.7 percent, to $50.35 before the market opened.

Leonard Green, which has a 9.3 percent stake in BJ's already, has been expanding its retail properties. It made a bid for 99 Cents Only Stores in March, bought Jo-Ann Stores and was part of a group that acquired J. Crew this year.

CEO Laura Sen said BJ's will benefit from Leonard Green and CVC's "retail expertise."

Wholesale clubs performed well during the downturn, and BJ's has continued to attract shoppers seeking good deals on bulk items.

The company's net income rose 29 percent in the most recent first quarter as food and gasoline sales rose. Total revenue climbed 10 percent to $2.83 billion.

The move is a shrewd move for Leonard Green, said Wall Street Strategies analyst Brian S. Sozzi. The private equity firm could eventually bring the chain back to the public markets at a higher price than it paid for it, he said, since it could expand the chain both nationally and internationally.

BJ's, based in Westborough, Mass., has 190 stores in 15 states.