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In the wake of Friday morning’s revelation that Wal-Mart was considering making a bid for BJ’s Wholesale Club, BJ’s stock price went up 10 percent, Wal-Mart’s dropped almost three percent, and questions were raised about whether federal antitrust regulators would allow it.

In addition, some analysts suggested that while there would appear to be symmetry between BJ’s and Wal-Mart’s Sam’s Club business, in fact they have two very different approaches, with BJ’s being more consumer-focused and Sam’s more interested in small businesses.

If approved by federal regulators, the deal would reduce the number of major players in the membership club business from three to two.

Wal-Mart’s Sam’s Club division is a the second biggest club business, operating 520 units in the US, plus another 64 stores in Brazil, China, Mexico and Puerto Rico. The division generates close to $30 billion a year in annual sales, or roughly 15 percent of Wal-Mart’s total sales. An acquisition of the BJ’s business would add close to $6 billion in annual sales to its coffers and 140 units in 16 states to its fleet.

This would bring Wal-Mart’s club business revenue much closer to Costco, which generates about $39 billion in sales from roughly 400 stores in the US and abroad.
KC's View:
One of our MNB users asked the question after reading Friday’s story: how can the government let Wal-Mart buy anything?

Good point. We’ll see.