BJ's Wholesale Goes Private - Analyst Blog

BJ's Wholesale Club Inc. (BJ) recently announced that majority of its shareholders approved the $2.8 billion offer of Leonard Green & Partners and CVC Capital Partners for taking the company private. The company added that approximately 72% of its shareholders approved the deal, while a meager 0.4% voted against it.

Going further, BJ's stated that they anticipate the deal to get completed on or about September 30, 2011. Moreover, the shares of the company will be delisted from the New York Stock Exchange on completion of the deal.

Flashback               

In June 2011, the board of directors approved the buyout offer of Leonard Green & Partners and CVC Capital Partners. The $2.8 billion cash deal offers BJ's shareholders $51.25 for each share of the company's common stock.

The news of the buyout first hit the streets following the recommendation given by the committee of autonomous directors in February 2011. BJ's announced that it is looking for strategic choices, which might include a possible sale of the company.

The leading warehouse club operator, which faces intense competition from Costco Wholesale Corporation (COST), had hired Morgan Stanley to guide the autonomous committee during the evaluation process.

BJ's Appeal

BJ's offers a striking prospect for acquisition as it has a healthy balance sheet with modest debt along with a business opportunity in a sturdy food and grocery market that is gaining ground.

Moreover, BJ's continued investments in Club payroll and Club remodels facilitate the company to augment the sales of perishable items, which have been the driving factor, and have helped in increasing sales, improving traffic counts and gaining market share.

Further, as a warehouse club, BJ's is uniquely positioned to drive traffic as it provides wider assortments of brands at compelling prices and offers its customers the choice of bulk or consumer-friendly package sizes.