The Men’s Wearhouse Inc. took its fight to buy Jos. A. Bank Clothiers Inc. directly to shareholders Monday by raising its bid and beginning a cash tender offer that would value the suit retailer at $1.61 billion.
The $57.50-a-share offer,slightly higher than a previous bid and a 38 percent premium to the closing price Oct. 8, expires March 28, Houston-based Men’s Wearhouse said in a statement. The clothing company also said it will nominate two independent directors to the Jos. A. Bank board at its 2014 annual meeting.
Shareholders will decide whether the 5.7 percent premium to last week’s closing share price is enough to settle the struggle between the retailers, which began when Jos. A. Bank approached its competitor with an offer of $2.3 billion. Men’s Wearhouse rejected that bid, which was disclosed Oct. 9, and then made its own $1.54 billion proposal for Jos. A. Bank.
“I would anticipate that investors vote in favor of it,” Mark Montagna, an analyst at Avondale Partners LLC in Nashville, Tenn., said Monday. “Also, they are naming two very highly qualified people to the board.”
Men’s Wearhouse’s nominees are John Bowlin, a former chief executive officer of Miller Brewing Co., and Arthur Reiner, who served as chairman and chief executive of Macy’s East.
Montagna said the offer falls within the $56- to $61-a-share range that his firm considers a fair price for the retailer. He said he’s not sure, though, whether the two companies will get along well enough to make a deal happen.
Jos. A. Bank pounced in October at a moment of turmoil for Men’s Wearhouse after it had cut its profit forecast the previous month and removed founder George Zimmer as executive chairman over strategy disagreements in June. Both companies have said that a combination of the two largest U.S. retailers of their kind would yield savings and increase profit margins. Men’s Wearhouse also has a lucrative tuxedo-rental business that could be expanded to Jos. A. Bank’s more than 600 stores.
Jos. A. Bank strengthened its acquisition-defense plan last week to repel its rival. The company said Jan. 3 that its so-called poison pill’s new 10 percent threshold is meant to level the “playing field” by matching Men’s Wearhouse’s takeover defense.
Jos. A. Bank shares jumped $2.46, or 4.5 percent, to close Monday at $56.87, and Men’s Wearhouse rose $1.09, or 2.2 percent, to $51.68. Jos. A. Bank shares gained 29 percent last year, while Men’s Wearhouse increased 64 percent.
“Our $57.50 per share proposal to acquire Jos. A. Bank is compelling and provides substantial value and immediate liquidity to Jos. A. Bank shareholders,” Men’s Wearhouse CEO Doug Ewert said in Monday’s statement.
“Although we have made clear our strong preference to work collaboratively with Jos. A. Bank to realize the benefits of this transaction, we are committed to this combination and, accordingly, we are taking our offer directly to shareholders,” Ewert said.
Men’s Wearhouse’s last reported annual sales of about $2.5 billion were more than twice those of Jos. A. Bank. It also has almost double the number of stores.
Information for this article was contributed by David Risser and Thomas Mulier of Bloomberg News.
Business, Pages 23 on 01/07/2014