Potential BJ’s takeover once again in spotlight
Shares in BJ's Wholesale Club were up 7 percent in afternoon trading on renewed speculation that the Natick discount retailer could soon be sold.
BJ's reportedly hired investment bank Morgan Stanley to conduct an auction of the chain after receiving an unsolicited offer earlier this year from Los Angeles private equity firm Leonard Green & Partners LP to buy BJ's.
But the New York Post reported yesterday that Leonard Green, which bought 9.5 percent of BJ's last summer, could launch a hostile bid to buy BJ's if the company doesn't go forward with the auction soon. The paper said BJ's promised Leonard Green it planned to initiate the auction after the holidays.
"If it gets to mid-January and a sale has not started, there may be difficult conversations," the Post quoted "one source close to the situation."
Some analysts have guessed that BJ's, which currently has a market value of about $2.6 billion, could fetch as much as $3 billion at auction. Shares have already climbed 45 percent this year, compared to 13 percent for the S&P 500, largely because of speculation the company could be sold.
BJ's and Leonard Green didn't immediately return calls seeking comment. But Morningstar, a Chicago research firm, said in a brief note to investors that "we don't find this rumor surprising," given Leonard Green's stake in BJ's and its history of investing in retail and consumer companies.
Last week, Leonard Green offered to buy crafts retailer Jo-Ann Stores Inc. for $1.6 billion. And it teamed up last month with TPG Capital to make a $3 billion bid for clothing retailer J. Crew Group Inc. But Morningstar warned "there is no assurance that a transaction is imminent."
BJ's, originally founded as an arm of Zayre Corp. in 1984, is now a standalone company with 191 stores in 15 states.
