GREENSBORO, N.C. – Leonard Green & Partners LP and CVC Capital Partners agreed to buy BJ’s Wholesale Club Inc. for $2.8 billion, gaining the third-largest U.S. warehouse-club chain.
BJ’s investors will receive $51.25 a share in cash for each share they hold, the companies said Wednesday in a statement. That’s 6.6 percent more than Westborough, Mass.-based BJ’s closing price on Tuesday.
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The acquisition gives the buyout firms 190 wholesale clubs in 15 U.S. states. Leonard Green, which manages about $9 billion, has taken part in at least five retail deals in the past year, including offers for fabric seller Jo-Ann Stores Inc. and J. Crew Group Inc. The firm also has holdings in Whole Foods Market Inc., the largest U.S. natural-goods grocer, and Petco Animal Supplies Inc.
BJ’s could expand outside its East Coast base and build the brand nationally through more advertising, Joseph Feldman, a retail analyst for Telsey Advisory Group in New York, said earlier this month.
Leonard Green and CVC are paying 7.1 times BJ’s earnings before interest, tax, depreciation and amortization, according to data compiled by Bloomberg. The median premium of six deals in the industry in the past five years was 8.9 percent.
Shares Jump
BJ’s rose $2.29, or 4.7 percent, to $50.37 at 8:25 a.m. in trading before the regular open of the New York Stock Exchange. The shares had gained less than 1 percent this year before Wednesday.
The average premium for 16 acquisitions in the U.S. retail-discount stores segment in the past five years was 20 percent, according to data compiled by Bloomberg. The biggest transaction was Family Dollar Stores Inc.’s $7.7 billion acquisition by Trian Fund Management in February.
The transaction may close in the fourth quarter, the companies said. Wednesday’s offer is a 38 percent premium compared with BJ’s closing price as of June 30, 2010, when Leonard Green disclosed it owned 9.5 percent of the stock.
BJ’s, No. 3 after Costco Wholesale Corp. and Wal-Mart Stores Inc.’s Sam’s Club, is a membership-based warehouse club offering food, household products, apparel and office equipment.
Zayre Corp., now known as TJX Cos., opened the first BJ’s in Medford, Mass., in 1984, and named it after executive Mervin Weich’s wife, Barbara Jane, according to Hoovers.com. BJ’s became part of Zayre’s Waban Inc. unit, which then spun off BJ’s in 1997.
