A BJ's Wholesale Investor Wants to Take the Company Private -- And BJ's Could Use the Time Away

BJ's Wholesale Club (BJ) has long been the also-ran in the world of membership clubs. At 188 stores, it's one-third the size of leader Costco (COST), but has only one-seventh as much revenue. Now, Green Equity -- an offshoot of powerhouse retail private-equity firm Leonard Green & Partners -- has scooped up nearly 10 percent of BJ's shares and proposed the company go private.

Which is just an awesome idea. Even Walmart (WMT) is having a tough time competing with Costco with its Sam's Club chain. BJ's management should jump on Green Equity's suggestion and encourage them to buy up more shares and take them private. Here's why:

• Synergies. Leonard Green currently has a piece of Sports Authority, Whole Foods Market (WFMI), The Container Store, Petco and Rite Aid (RAD), just to name a few. Who knows what advantages the connection to Green might bring BJ's in terms of product sourcing on pharmacy, sporting goods, grocery, and so on. Maybe they could put Equinox gyms -- another Green property -- into their stores? There's plenty of opportunity for innovating with expertise Green has access to in its portfolio companies.
• Turnaround savvy. Leonard Green is widely considered one of the more successful private-equity houses for scooping up struggling retail brands and whipping them into shape. If anyone can figure out a way for a regional wholesale club to successfully compete with the big guys, they can.
• A chance to make moves out of the spotlight. BJ's likely needs to make some wrenching choices as it struggles to improve its warehouse-club model. It may need to spend big to remake stores, possibly needing to sign up new vendors as it adjusts its merchandise mix. Laggard stores may also need to close. All of that type of thing is better done as a private company, rather than a public company that will see its share price hit every time they take a big writedown for store closures.