NATICK, Mass. — Stock in BJ's Wholesale Club soared Wednesday amid speculation that the warehouse club operator would put itself up for sale.
Bloomberg news reported Wednesday that BJ's had hired Morgan Stanley to conduct a sale, citing three unnamed sources. BJ's has been the subject of investor speculation for some time, but interest was renewed in late June when Los Angeles-based private investor Leonard Green and Partners disclosed a 9.5% ownership stake in BJ's and expressed interest in talking the company private.
A BJ's spokeswoman declined comment to SN. The Bloomberg report said an offer from Green sparked the hiring of an advisor. Sources contacted by SN Wednesday stressed they didn't know whether a sale would necessarily take place.
"BJ's would have to respond to any serious offer that was made — but what we don't know is what had been discussed between Leonard Green and the company," Chuck Cerankosky, an analyst following BJ's for Northcoast Research, Cleveland, told SN. "At some stage the discussions reach a point at which the company and the board feels it needs to hire a financial advisor. But that doesn't always mean there will be a sale, as we saw recently when Casey's General Stores hired a financial advisor and rebuffed a hostile takeover from Couche Tard and then discussed a friendly offer with 7-Eleven which also ended without a sale."
Cerankosky noted that BJ's is attractive to investors because it generates strong cash flow, performs well and has a clean balance sheet. "It's attracted interest from investors who realize the stock could go higher on fundamentals and higher still on a strategic or financial buyer for the organization."
The company's stock rose 12.6% in Wednesday’s trading, closing near a 52-week high.