Nov 26, 2013
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Men's Wearhouse turns tables with bid for Jos. A. Bank

Nov 26, 2013

Men's Wearhouse Inc struck back at Jos. A. Bank Clothiers Inc with a $1.5 billion bid to acquire the suit and tuxedo retailer, only weeks after rejecting a takeover offer from its smaller rival.

Men's Wearhouse offered $55 per share in cash for Jos. A. Bank, a 9 percent premium to the stock's close on Monday.

Jos. A. Bank's shares rose 11.6 percent to $56.41 in early trading on Tuesday, topping the offer in a sign investors might be expecting a higher bid. Men's Wearhouse shares rose 6 percent.

The retaliatory offer from Men's Wearhouse, which the company says implies an enterprise value of about $1.2 billion for Jos. A. Bank, follows pressure from its largest shareholder, New York-based hedge fund Eminence Capital LLC.

Eminence, along with other hedge funds that hold about 30 percent of Men's Wearhouse shares, had tried to persuade other investors to pressure the company into accepting the takeover offer from Jos. A. Bank.

"We are pleased to see that the board of Men's Wearhouse agrees with us and recognizes the substantial benefits of merging with Jos. A. Bank," said Eminence Capital CEO Ricky Sandler.

As of Aug. 3, Jos. A. Bank had cash and cash equivalents of about $333.2 million and no long-term debt.

The $2.3 billion, or $48 per share, offer by Jos. A. Bank was swiftly rebuffed by Men's Wearhouse in October. Men's Wearhouse also adopted a poison pill to prevent a hostile takeover.

In a statement on Tuesday, Men's Wearhouse said it had the "advantage in scale, growth and performance" to combine the two tuxedo-rental and suit-selling chains.

"We believe we are the right acquirer for this combination and that our experienced management team is best positioned to execute the integration of our companies," said Bill Sechrest, lead director of the board of Men's Wearhouse.

Jos. A. Bank was not immediately available for comment.

When Men's Wearhouse rejected Jos. A. Bank's proposal in October, it said a combination of the two companies raised anti-trust issues.

Jos. A. Bank terminated its offer to buy Men's Wearhouse on Nov. 15 but did not rule out another bid in future.

Men's Wearhouse shares were trading up at $49.97.

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