In re BJ's Wholesale Club Inc. Shareholder Litigation
Status: Ongoing Case
The litigation arose out of the acquisition of BJ’s Wholesale Club, Inc. (“BJ’s” or the “Company”) by private equity firms Leonard Green & Partners L.P. and CVC Capital Partners (the “Buyout Group”).The Complaint alleges that BJ’s board of directors (the “Board”) breached its fiduciary duties and caved to the will of BJ’s self-interested senior management in approving a going private transaction on unfair terms and for an inadequate price.The Complaint further alleges that the Board favored the Buyout Group over other potential buyers and failed to conduct a proper sales process.The Buyout Group also financed the deal with the Company’s own cash and loans from a consortium of banks that are secured by the Company’s own assets.Following consummation of the acquisition, the Buyout Group entered into sale lease-back transactions, providing immediately liquidity for them.
Expedited discovery confirmed that BJ’s management did have significant change-of-control packages and that the Board rejected two potentially higher bids for the Company.We fully briefed a motion to preliminarily enjoin the transaction based upon disclosure claims only (preserving our damages claims).
On August 29 and 31, 2011, in response to plaintiffs’ briefs in support of their motion for a preliminary injunction, defendants mooted plaintiffs’ disclosure claims by making two supplemental disclosures. We are currently pursuing a damages action on the remaining claims.