WESTBOROUGH, Mass. — Ending months of speculation, BJ’s Wholesale Club Inc. agreed to be sold to private equity investors for $2.8 billion in cash.

Ending months of speculation, BJ’s Wholesale Club Inc. agreed to be sold to private equity investors for $2.8 billion in cash.

The acquisition by Leonard Green & Partners LP (LGP)and CVC Capital Partners was nearly a year in the making. LGP announced on July 1, 2010, that it had acquired a 9.5% stake in the regional warehouse club operator.

The investment firm stated in a filing with the Securities and Exchange Commission that it believed the retailer’s shares were undervalued and that it intended to contact the chain’s management to discuss strategic options, ranging from providing additional financing to taking the company private.

Then in February, BJ’s confirmed that it had retained Morgan Stanley & Co. and was "exploring strategic alternatives," although the retailer stopped short of saying that it was considering a sale.

Under the terms of the deal announced late last month, BJ’s shareholders will receive $51.25 per share in cash for each share of BJ’s common stock they hold. The company says that represents a roughly 38% premium over the closing price of BJ’s shares on June 30, 2010, the day before LGP announced its 9.5% ownership stake in the company, and an approximately 7% premium over the closing price of BJ’s shares on June 28, 2011.

Not every shareholder thinks that offer is generous enough. Lawyers for shareholder Maxine Phillips filed a lawsuit against BJ’s, claiming that the proposed $2.8 billion price of the acquisition is “grossly inadequate.”

The deal was unanimously approved by BJ’s board of directors, however, following the recommendation of its committee of independent directors.

The merger is still subject to the approval of BJ’s shareholders, as well as to customary closing conditions and regulatory approvals. The transaction is expected to be completed during the fourth quarter of 2011.

One result of the deal may be the expansion of BJ’s beyond its current core markets on the East Coast, analysts at Janney Capital Markets wrote in a research note.

"BJ’s will benefit from the continued execution of our business plan and the significant retail expertise of our new partners at LGP and CVC, as well as from continued investments in our clubs, our people and technology, and the future of our business," stated Laura Sen, president and chief executive officer of BJ’s. "Our members will continue to enjoy the top-quality merchandise, outstanding savings and great service that they’ve come to expect from BJ’s on every visit."

Added LGP partner Jonathan Seiffer: "BJ’s is the clear leader in the wholesale club industry in the eastern United States, with strong brand equity and a proven and successful strategy. We are pleased to partner with Laura and the management team and look forward to the next phase of the company’s growth."

CVC, too, expressed interest in working with BJ’s current management team.
That team was shaken up in January, after the company reported disappointing same-store sales growth during the holiday season.

As part of that move, Robert Eddy was promoted to executive vice president and chief financial officer, replacing former CFO Frank Forward. Eddy had previously served as senior vice president and director of finance.

In addition, Cornel Catuna was promoted to executive vice president of club operations, taking over from former club operations vice president Thomas Gallagher. Both Forward and Gallagher retired on January 29.

Those management changes were accompanied by plans to restructure home office and some field operations and to close five underperforming stores (three in the Atlanta market and one each in Sunrise, Fla., and Charlotte, N.C.). Sen at the time described the stores as having "historically underperformed" relative to other outlets in the chain, and she said the money BJ’s saved by shutting the locations would be invested in new clubs, remodels and information technology.

BJ’s now joins a stable of LGP retail investments that includes J. Crew, Jo-Ann Stores, Whole Foods Market, Neiman Marcus Group, PETCO, Leslie’s Poolmart, The Sports Authority, The Container Store, Tourneau, David’s Bridal, Jetro Cash & Carry and The Tire Rack. Current U.S. retail investments by CVC include Pilot Flying J and Leslie’s Poolmart.