NEW YORK – BJ’s Wholesale Club Inc.’s bullish options should be bought because the third-largest U.S. warehouse chain by sales will probably attract a buyout bid of as much as $53 a share, MKM Partners LP said.
Jim Strugger, an options strategist, and Keith Moore, an event-driven strategist, recommended buying a September $47.50 call while also selling a September $50 and $52.50 call, a strategy known as a “call tree” that collects more from the sold contracts than a “call spread” while betting on a tighter range for how much the shares may rally. BJ’s fell 0.6 percent to $47.60 at 10:35 a.m. in New York.
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The strategists cited a June 23 New York Post report that BJ’s wants $55 a share from Leonard Green & Partners LP and CVC Capital Partners. The two firms offered to buy BJ’s without saying how much they would spend, according to a regulatory filing this month. BJ’s board said in February that it decided to explore a possible sale.
“There is a reasonable probability that BJ’s Wholesale Club will be acquired by private equity firms that have already submitted a bid and expect the final price to be in the $52.50 to $53 range,” the Stamford, Conn.-based strategists wrote.
BJ’s is seeking $55 a share from Green and CVC, or almost $3 billion, according to the Post, which cited unidentified people. The retailer earlier this month was offered $50 a share, less than the $52 a share Janney Montgomery Scott said would be a “fair value,” the newspaper said.
BJ’s declined comment on the analysts’ comments and takeover speculation, Cathy Maloney, a company spokeswoman, said Monday by telephone.
