BJ’s Wholesale Club Up For Sale; Amazon May Be Interested
04-15-17, 09:33 AM
#1
DVD Talk Special Edition
Thread Starter
BJ’s Wholesale Club Up For Sale; Amazon May Be Interested
From nypost.com:
BJ’s Wholesale Club is putting itself up for sale, and Amazon has expressed modest internal interest in the chain, retail resources tell The Post.
BJ’s, a Northeast-regional warehouse retailer that’s owned by private equity firms, has recently scrapped ambitions for an initial public offering because of Wall Street’s growing worries over the retail sector, sources said.
Instead, CVC Capital Partners and Leonard Green & Partners, the buyout firms that took BJ’s private for $2.8 billion six years ago, are pressing ahead for an outright sale that could fetch more than $4 billion, according to people close to the situation.
BJ’s has been interviewing bankers so it can begin a sale process, and the company plans to distribute sales books in a few weeks, sources said.
Retail-savvy buyout firms, like KKR, Bain Capital, TPG and Blackstone, are expected to take a look, insiders said. In 2011, Walmart made an unsuccessful approach to buy BJ’s, but is unlikely to make another attempt, one source speculated.
Meanwhile, Amazon — which has been exploring an expansion into brick-and-mortar stores after conquering online retailing — has also recently discussed evaluating BJ’s as an acquisition target, a source close to the situation said. It is not known if the e-commerce giant is still interested or, if it is, will bid on the chain if it goes on the block.
CVC and Leonard Green expect to attract between $4 billion and $4.5 billion in a sale — roughly nine times BJ’s $450 million in Ebitda, or earnings before interest, taxes, debt and amortization.
If successful, the private equity firms will have invested about $600 million in cash since buying BJ’s in 2011 (the rest of the buyout was funded with debt), while collecting between $2.8 billion and $3.3 billion in dividends and sale proceeds — roughly a five-fold return on their money.
BJ’s, which operates 213 warehouse clubs and 130 gas stations across 15 states, generates about $250 million a year from membership fees.
BJ’s and Amazon also share overlap when it comes to merchandise, as both do a big business selling groceries, electronics, home goods and auto parts. BJ’s also has a robust business in appliances and furniture — niches where Amazon is looking to expand, according to one source.
Amazon, meanwhile, has been struggling to find enough warehouse space for its Amazon Fresh delivery service, and adding BJ’s could be a help, at least in the Northeast, the source said.
However, the private equity firms’ cost-cutting and cash skimming has hurt BJ’s competitively, Kantar Research analyst Tim Campbell said.
The chain has not done as well as it could online, hasn’t grown much beyond its Northeast base, and has had trouble retaining newer members, he said.
“I think the buyout has been beneficial to the owners but not for the actual BJ’s business,” Campbell told The Post.
A BJ’s spokesman said, “As a matter of policy, BJ’s Wholesale Club does not comment on rumors and speculation. As a company, we’re focused on providing outstanding value and service to our members.”
Amazon did not return calls.
http://nypost.com/2017/04/14/private...holesale-club/
BJ’s Wholesale Club is putting itself up for sale, and Amazon has expressed modest internal interest in the chain, retail resources tell The Post.
BJ’s, a Northeast-regional warehouse retailer that’s owned by private equity firms, has recently scrapped ambitions for an initial public offering because of Wall Street’s growing worries over the retail sector, sources said.
Instead, CVC Capital Partners and Leonard Green & Partners, the buyout firms that took BJ’s private for $2.8 billion six years ago, are pressing ahead for an outright sale that could fetch more than $4 billion, according to people close to the situation.
BJ’s has been interviewing bankers so it can begin a sale process, and the company plans to distribute sales books in a few weeks, sources said.
Retail-savvy buyout firms, like KKR, Bain Capital, TPG and Blackstone, are expected to take a look, insiders said. In 2011, Walmart made an unsuccessful approach to buy BJ’s, but is unlikely to make another attempt, one source speculated.
Meanwhile, Amazon — which has been exploring an expansion into brick-and-mortar stores after conquering online retailing — has also recently discussed evaluating BJ’s as an acquisition target, a source close to the situation said. It is not known if the e-commerce giant is still interested or, if it is, will bid on the chain if it goes on the block.
CVC and Leonard Green expect to attract between $4 billion and $4.5 billion in a sale — roughly nine times BJ’s $450 million in Ebitda, or earnings before interest, taxes, debt and amortization.
If successful, the private equity firms will have invested about $600 million in cash since buying BJ’s in 2011 (the rest of the buyout was funded with debt), while collecting between $2.8 billion and $3.3 billion in dividends and sale proceeds — roughly a five-fold return on their money.
BJ’s, which operates 213 warehouse clubs and 130 gas stations across 15 states, generates about $250 million a year from membership fees.
BJ’s and Amazon also share overlap when it comes to merchandise, as both do a big business selling groceries, electronics, home goods and auto parts. BJ’s also has a robust business in appliances and furniture — niches where Amazon is looking to expand, according to one source.
Amazon, meanwhile, has been struggling to find enough warehouse space for its Amazon Fresh delivery service, and adding BJ’s could be a help, at least in the Northeast, the source said.
However, the private equity firms’ cost-cutting and cash skimming has hurt BJ’s competitively, Kantar Research analyst Tim Campbell said.
The chain has not done as well as it could online, hasn’t grown much beyond its Northeast base, and has had trouble retaining newer members, he said.
“I think the buyout has been beneficial to the owners but not for the actual BJ’s business,” Campbell told The Post.
A BJ’s spokesman said, “As a matter of policy, BJ’s Wholesale Club does not comment on rumors and speculation. As a company, we’re focused on providing outstanding value and service to our members.”
Amazon did not return calls.
http://nypost.com/2017/04/14/private...holesale-club/
