Private equity firms Leonard Green & Partners L.P. and CVC Capital Partners Ltd. have made a joint bid to acquire warehouse club chain BJ's Wholesale Club, Inc. (BJ), Leonard Green said in a regulatory filing on Friday. Financial terms of the offer were not disclosed.
In a filing with the Securities and Exchange Commission, Leonard Green said that a newly formed entity jointly controlled by it and CVC Capital would acquire all of the outstanding common shares of BJ's through a merger. Leonard Green also disclosed that it has a 9.3 percent stake in BJ's, owning 5.10 million shares.
The New York Post had reported last week that Leonard Green and CVC Capital are set to make a joint buyout offer for BJ's that would likely value the company at a minimum of $2.8 billion.
Massachusetts-based BJ's said in early February that its board of directors has decided to explore strategic alternatives, including a possible sale of the company, and named Morgan Stanley & Co. Inc. (MS) to assist in the process. The retailer has a market capitalization of $2.68 billion.
Leonard Green has about $9 billion in equity capital under management. The private equity firm, founded in 1989, has invested in 57 companies with aggregate value of $49.1 billion. Leonard Green is still looking to invest $5.3 billion in cash that it raised for a buyout fund in 2007.
The private equity firm has also been involved in other acquisition deals in the retail sector recently. Specialty fabrics and crafts retailer Jo-Ann Stores, Inc. (JAS) said in December that it has agreed to be acquired by Leonard Green for about $1.6 billion in cash. In another deal in late November, Leonard Green and another private equity firm TPG Capital agreed to acquire apparel retailer J. Crew Group, Inc. (JCG) for about $3.0 billion.
Meanwhile, London-based CVC Capital Partners manages over $42 billion in funds. The company was established in 1981 as Citicorp Venture Capital, a subsidiary of Citigroup Inc. (C). In Europe and North America, CVC has completed over 250 company acquisitions with an aggregate transaction value of $145 billion.
BJ's and other operators of whole sale clubs and off-price retail shops have been reporting higher comparable stores sales for the past few months. In early June, BJ's reported a 7.4 percent increase in comparable club sales for the month of May 2011, which includes a contribution of 4.4 percent from gasoline sales.
In mid-May, BJ's reported a 29 percent increase in profit for the first quarter to $33.67 million or $0.62 per share. The increase was mainly driven by a 6.3 percent increase in comparable club sales, including a contribution from gasoline sales of 3.9 percent.
BJ's currently operates 190 warehouse clubs in 15 states, mainly located on the East Coast.
In Friday's regular trading, BJ is trading at $48.93, up $1.07 or 2.24 percent on 0.68 million shares. In the past 52 weeks, the stock has been trading in a range of $36.77-$52.46.
For comments and feedback: editorial@rttnews.com