Leonard Green Mulls BJ's Buyout Bid

BJ’s Wholesale (NYSE:BJ) and private equity firm Leonard Green have entered into a confidentiality pact that could lead to a buyout of the No. 3 U.S. wholesale club operator.

The pact was revealed in a new regulatory filing by Los Angeles-based Leonard Green, which has already invested in consumer companies such as the Sports Authority, Neiman Marcus and Rite Aid (NYSE:RAD).

According to the Securities and Exchange Commission filing, Leonard Green entered into a confidentially pact on March 21 with BJ’s, which agreed to provide certain confidential data on its business and properties.

Leonard Green said in the SEC filing it is evaluating a potential acquisition of BJ’s and has agreed to a restricted ability to acquire more shares of the company before March 21. The private equity firm also said it has beneficial ownership of 9.3% of BJ’s voting stock.

BJ’s, which trails rivals Costco (NASDAQ:COST) and Wal-Mart’s (NYSE:WMT) Sam’s Club, announced plans to explore a sale in February. It retained Morgan Stanley (NYSE:MS) to help it weigh its strategic options.

Shareholders cheered the Leonard Green news, bidding BJ’s stock 3.18% higher to $48.00. in Tuesday’s premarkets. The stock had been almost 3% in the red for 2011 as of Monday’s close.