BJ’s May Become a Private Club
There’s nothing like the possibility of going private to
send the shares of a publicly-traded company’s stock higher. That’s what happened
when it was learned that a private equity fund with a major stake in BJ’s Wholesale
Club plans to recommend the retailer take itself off the (stock) market because
its shares are undervalued.
Green Equity Investors, the second largest investor
in BJ’s with 9.5 percent of the retailer’s shares, gave notice in a filing
with the Securities and Exchange Commission (SEC) that it plans to talk with
the chain about "potential options
for enhancing shareholder value. These discussions may include a ‘going-private’
transaction, new financings (potentially through mortgage financings or sale
leaseback transactions), or other similar transactions."
Neil Currie, a retail analyst for
UBS Investment Bank, wrote in a client note that BJ’s management has "meaningfully
improved’ the company’s
position and "we have long held a view that BJ’s might be a candidate
for private equity investment."
According to a Wall Street
Journal report, David Strasser, an analyst
with Janney Montgomery Scott, said in a note that BJ’s is attractive for acquisition
because, as the smallest of the warehouse clubs with locations on the East
Coast, it has room to grow.
"At some point, [BJ’s] will see improved productivity and lower operating
costs," Mr. Strasser wrote. "These trends make [BJ’s] attractive
to private-equity investors, especially in a recovering economy."
offered the typical non-response response to the news.
Cathy Maloney, vice president
of investor relations for BJ’s, told The Boston
Globe, "We have an obligation to run the business in a way that
maximizes shareholder value for the long term. We work hard to provide our
members with outstanding value while investing in our communities and our
team members. We believe that this is the right strategy to increase shareholder
value for the long term.’
Discussion Question: Does it make sense for BJ’s Wholesale Club to go private
from a strictly competitive retailing point of view?
- Leonard Green Eyes BJ’s Wholesale Club – The Wall Street Journal
- Equity firm says it will urge BJ’s to go private – The Boston Globe
- BJ’s Wholesale Club, Inc. Schedule 13D – United States Securities
and Exchange Commission