BJ’s to Be Acquired by Private Equity Firms

BJ’s Wholesale Club Inc. has entered into a definitive agreement to be acquired by affiliates of Leonard Green & Partners LP (LGP) and funds advised by CVC Capital Partners in an all-cash transaction worth around $2.8 billion. Under the terms of the deal, BJ’s shareholders will get $51.25 per share in cash for each share of the company’s common stock they hold, representing an approximately 38 percent premium to the closing price of BJ’s shares on June 30, 2010, the day before LGP revealed its 9.5 percent ownership stake in the company, and an approximately 7 percent premium to the closing price of BJ’s shares on June 28, 2011.

Acting upon the recommendation of its committee of independent directors, and following a process launched in February 2011 to explore and evaluate strategic alternatives, BJ’s board of directors has unanimously approved the merger agreement and recommends that all shareholders vote in favor of it.

According to Thomas Shields, lead director and chairman of the independent committee, the transaction “is the result of a comprehensive process in which an independent committee of our board, with the assistance of its outside financial advisor, thoroughly explored and carefully considered alternatives to enhance value for our shareholders. In connection with this process, CVC and LGP made a definitive offer to acquire BJ’s, and this offer was fully negotiated by the company. BJ’s board of directors believes that this transaction maximizes value and is in the best interests of our shareholders, employees and members.”

“BJ’s will benefit from the continued execution of our business plan and the significant retail expertise of our new partners at LGP and CVC, as well as from continued investments in our clubs, our people and technology, and the future of our business, added Laura Sen, president and CEO of the Westborough, Mass.-based warehouse club retailer, which operates 190 locations in 15 states. “Our members will continue to enjoy the top-quality merchandise, outstanding savings and great service that they’ve come to expect from BJ’s on every visit.”

“BJ’s is the clear leader in the wholesale club industry in the eastern United States, with strong brand equity and a proven and successful strategy,” remarked Jonathan Seiffer, partner of Los Angeles-based LGP, while Cameron Breitner, managing director of CVC in New York, observed: “With its leading market positions, outstanding value proposition and service, and valued employee base, BJ’s is very well positioned to extend its history of strong financial and operating performance. This transaction will build upon CVC’s significant history of investing in world-class businesses in the consumer and retail sectors.”

Subject to the approval of BJ’s shareholders, customary closing conditions and regulatory approvals, the merger is expected to close during the fourth quarter of 2011.

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