BJ’s Wholesale Club, operator of 215 club stores in 16 states (primarily on the East Coast), made it official earlier this month by filing a prospectus to launch an IPO with the Securities and Exchange Commission (SEC).
The Westborough, MA-based discount merchant was a publicly-traded firm until 2011 when current private equity owners Leonard Green & Partners and CVC Capital Partners acquired it in a $2.8 billion all-cash deal.
According to the prospectus, the company plans to offer 37.5 million shares priced at $15 to $17 each, which could raise as much as $637 million that it plans to pay down a significant portion of its $2.4 billion in debt. Some of that debt was incurred to issue $735.5 million dividend to its owners in 2017. In the original private equity acquisition seven years ago, the partners invested about $600 million in cash. A year later, they made a $643 million distribution and in 2013 issued another $450 million dividend.
Leonard Green and CVC currently own 98 percent of BJ’s and would still retain a majority stake in the reformulated company, giving them full control of board of directors’ selections. Chairman Christopher Baldwin, who has also been chief executive, since 2016, would remain BJ’s CEO after BJ’s becomes a public company.
While BJ’s has grown its top line since 2011 – sales for fiscal 2018 were $12.5 billion – earnings were not stellar. BJ’s net income for this fiscal year (ended February 3) was only $50.3 million.
The prospectus also noted the importance of BJ’s presence in metro New York where its 39 clubs accounted for 25 percent of overall sales in 2017.