Jos. A. Bank urges shareholders to reject $1.61 bn hostile bid from Men's Wearhouse

The board of US-based menswear retailer Jos. A. Bank Clothiers yesterday urged shareholders to reject a $1.61-billion takeover offer from rival Men's Wearhouse Inc, saying that the hostile bid is inadequate and opportunistic.

Jos. A. Bank said that the  $57.50 per share offer significantly undervalued the company and its future prospects.

Men's Wearhouse's offer of $57.50 per share is up from its prior offer of $55 per share, or $1.54 billion. Jos A Bank had also rejected the previous offer in late December, calling it too low.

Men's Wearhouse said it was taking the bid directly to Jos A Bank shareholders and it also planned to nominate two people to the Jos A Bank board.

In response to the latest rejection, Men's Wearhouse yesterday called on Jos. A. Bank's shareholders to vote its nominees to the board, replacing chairman Robert Wildrick and CEO Neal Black.

The moves signal a new stage in the takeover battle, one that started last year with Jos A Bank, the unwanted bidder, but now in a reversal of roles, the pursuer was the pursued.

Further, the one-time target has come back firing on all cylinders, something that Jos A Bank failed to do in its own aborted merger campaign.

The Men's Wearhouse's $57.50 offer is 4.5 per cent, or $2.50 per share, higher than its previous offer of $55.00 made on 26 November 2013, which the board of Jos. A. Bank rejected and refused to negotiate. 

The offer represents a premium of 38.02 per cent based on Jos. A. Bank's closing price of $41.66 on 8 October 2013, the day before Jos. A. Bank submitted a $48 per share bid to acquire The Men's Wearhouse. 

Men's Wearhouse said that prior to its initial November offer of $55 per share, Jos. A. Bank had not traded above the current offer price of $57.50 in the previous three years.  In the last three years, Jos. A. Bank has traded as low as $37.31.

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 catalogue 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.

Men's Wearhouse has market cap of $2.4 billion, annual sales of about $2.5 billion and 1,137 stores, while Jos. A. Bank has market cap of $1.6 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.