UPDATE: Leonard Green Looking At Potentially Buying BJ's

Private-equity firm Leonard Green & Partners LP is looking into buying BJ's Wholesale Club Inc. (BJ) and has entered into a confidentiality agreement to conduct due diligence.

A purchase would make BJ's, which sells its merchandise through membership-only clubs, a private company, the latest in a string of retail buyouts.

A regulatory filing March 21 outlined a confidentiality agreement--a private exchange between the two entities--in which BJ's said it would provide Leonard Green material to use in "evaluating a potential acquisition of the company."

It has been reported that Leonard Green was interested in buying the company, in which it already holds a 9.3% stake. BJ's could not be reached Tuesday morning. The company has indicated it does not plan to supply updates or make statements about what is going on unless a definitive move is recommended by a committee of independent directors or the process ends.

Private-equity interest in the retail sector has picked up recently, and Leonard Green has been an especially busy player. The Los Angeles buyout firm first reported its stake in BJ's last July, saying it intended to approach the company about going private; recently reached deals for fabric and crafts retailer Jo-Ann Stores Inc. (JAS); and partnered with TPG Capital on its buyout of J. Crew Group Inc. (JCG). The J. Crew deal, for $43.50 a share, or $3 billion, was at a 16% premium to where shares were just before the deal was announced.

Leonard Green is apparently hungry for another acquisition, also having recently made an offer to buy 99 Cents Only Stores (NDN). That offer was at a 14.4% premium to shares' closing price the day before.

BJ's would likely fetch a percentage premium in the teens as well, analysts say, with the stock trading between roughly $40 and $50 for the past nine months. Shares were recently up 1.7% to $47.29.

Earlier this month, BJ's said its fiscal fourth-quarter profit dropped 81%, hurt by charges related to store closings, though revenue increased. Membership clubs have been reporting growth of late as customers look for deals.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; [e-mail]

-Nathan Becker contributed to this article