Men's Wearhouse Inc today rejected a $2.3-billion unsolicited cash takeover offer from Jos. A. Bank Clothiers Inc, saying that the bid undervalued the company and was not in the best interest of shareholders.
''The Men's Wearhouse board concluded that the proposal significantly undervalues Men's Wearhouse and its strong prospects for continued growth and value creation, and is not in the best interests of Men's Wearhouse or its shareholders,'' the California-based retailer said in a statement
In order to prevent an hostile takeover, Men's Wearhouse also adopted a limited-duration shareholder rights plan or a poison pill, which would be triggered if an outside investor acquires more than 10 per cent or more of Men's Wearhouse common stock, or 15 per cent if a passive institutional investor were to take a stake.
The shareholder rights plan expires on 30 September 2014, unless Men's Wearhouse decides to end it earlier.
Menswear retailer Jos A Bank yesterday launched a $2.3-billion unsolicited bid to buy its bigger rival Men's Wearhouse, offering to pay $48 per share, a 36-per cent premium to Tuesday's closing price of Men's Wearhouse. (See: Jos A Bank Clothiers launches $2.3 bn bid for Men's Wearhouse)
Men's Wearhouse said that it has undertaken a number of strategic initiatives to accelerate growth and profitability, including its recent acquisition of JA Holding and the Joseph Abboud brand.
"We are confident that we can achieve total shareholder returns well in excess of what can be derived from Jos. A. Bank's unsolicited and inadequate proposal," said, Doug Ewert, president and CEO of Men's Wearhouse.
The rejection may set up a potential battle between two of the biggest retailers of men's clothing in the US.
Men's Wearhouse has market cap of $2.2 billion, annual sales of about $2.5 billion and 1,137 stores, while Jos. A. Bank has market cap of $1.2 billion, annual sales of $1 billion and 623 stores.
But both retailers have seen their earnings fall as shoppers reigned in purchases due to the economic uncertainty.
Jos A Bank's second-quarter net income fell 39 per cent although it offered five free suits on purchase of one, while Men's Wearhouse second-quarter earnings fell 28 per cent and also cut its full-year guidance.
Founded in 1905 by Charles Bank, an immigrant from Lithuania, Jos A Bank is one of the leading retailers in the US of men's classically-styled tailored and casual clothing, sportswear, footwear and accessories.
The Maryland-based company sells its product line in 44 states and the District of Columbia, as well as through a nationally distributed catalog and an e-commerce website.
Founded in 1973, Texas-based Men's Wearhouse is one of North America's largest specialty retailers of men's apparel.
It operates under its own name Men's Wearhouse, K&G Superstores - an off-price retail chain featuring discontinued items, Moores Clothing for Men - a Canadian chain of men's clothing stores, Twin Hill Corporate clothing and MW Cleaners in the Houston Area.