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Leonard Green, CVC to submit bid for BJ's Wholesale

Shoppers leave a BJ's store in Virginia
Shoppers leave a BJ's store in Virginia

(Reuters) - Private equity firm Leonard Green & Partners said it has teamed up with CVC Capital Partners to submit a proposal to buy BJ's Wholesale Club Inc , the latest in a flurry of deal activity in discount retail.

Leonard Green and its affiliates, which also reported a 9.3 percent stake in the retailer in a regulatory filing, however, did not disclose the financial terms of the proposal.

The news comes after the New York Post reported last week, citing sources, that the two firms could make a joint buyout offer for BJ's Wholesale valuing the retailer at about $2.8 billion.

The company's shares rose 4 percent to $50 in pre-market trading on Friday. At that price, BJ's would be worth $2.73 billion.

A deal would be the latest in Leonard Green's retail buying spree. The private equity firm, which already owns Jo Ann Stores Inc and upscale apparel retailer J. Crew, has teamed up with the Schiffer-Gold family to bid for 99 Cents Only Stores.

Cheap valuations and extensive real estate assets have made discount and dollar stores attractive targets for other players and private equity firms.

BJ's Wholesale's is the third-largest wholesale club retailer behind Costco Wholesale Corp and Sam's Club, a unit of Wal-Mart Stores Inc .

Wholesale clubs charge customers a membership fee, in return for which they can shop for deals on large quantities of everyday items like food and toilet paper.

In March, Leonard Green & Partners said it was evaluating whether to buy BJ's and had entered into a confidentiality agreement with the company.

The BJ's Wholesale's board decided to explore a sale and other alternatives in February, after reports last year suggested Leonard Green had offered to buy the chain.

(Reporting by Viraj Nair in Bangalore; Editing by Saumyadeb Chakrabarty, Sriraj Kalluvila)

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