Friday, April 27, 2018

Men's Wearhouse flips script, makes bid for Jos. A. Bank

NEW YORK — Never say never.

Just when it looked like a potential combination of Men's Wearhouse and Jos. A. Bank was dead in the water, the script has been flipped.

Now it's Men's Wearhouse that is offering approximately $1.54 billion for its rival. Less than two weeks ago, Jos. A. Bank dropped a $2.3 billion bid for Men's Wearhouse. A combination could create a menswear powerhouse of more than 1,700 outlets.

The announcement that Men's Wearhouse was interested in a possible deal came as a bit of a surprise on Tuesday. The retailer had received an unsolicited offer of $48 per share from Jos. A. Bank Clothiers Inc. in September. But it rejected that bid in October, calling it "opportunistic" and "inadequate."

Jos. A. Bank was still in the hunt back then, though, saying it would be open to raising its offer if allowed to assess whether an increased bid was justified. But Men's Wearhouse wouldn't give the Hampstead, Md., company access to nonpublic information, and Jos. A. Bank dropped its bid on Nov. 15.

While Men's Wearhouse publicly scoffed at Jos. A. Bank's offer, the proposal clearly gave it some food for thought. Lead director Bill Sechrest said in a statement Tuesday that the Houston company's board decided to review its strategic options after Jos. A. Bank's buyout bid went public.

In addition, Men's Wearhouse faced pressure from its biggest shareholder, Eminence Capital LLC. Last week, Eminence urged Men's Wearhouse to talk with Jos. A. Bank. The hedge fund argued that a combination of the two businesses would create value and increase the growth potential of Men's Wearhouse. Eminence owns 9.8 percent of Men's Wearhouse's stock.

Men's Wearhouse Inc. appears to have come around to Eminence's view, with Sechrest stating that the potential acquisition of Jos. A. Bank at $55 per share has "strategic logic" and could benefit its shareholders, workers and customers. The per-share offer is a 9 percent premium to Jos. A. Bank's $50.32 Monday closing price.

Jos. A. Bank said Tuesday that its board will evaluate the offer and respond "in due course."

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