Men’s Wearhouse hikes Jos A Bank acquisition offer to $1.61 billion
07 Jan 2014
Despite both sides rejecting takeover bids, the two men's clothing companies, The Men's Wearhouse and Jos A Bank may be ready for a deal.
The clothing companies have been going through the courtship rituals for months, with mutual rejections, but the alliance bid came close to realisation yesterday with Men's Wearhouse sweetening its offer to acquire Jos A Bank to $1.61 billion.
Even as the companies continue to keep their distance, according to analysts a combination was inevitable. The move would enable both chains to cut costs and boost profits in an increasingly competitive market in which shoppers are getting more price conscious. However, executives had so far failed to hammer out a deal despite interest on both sides.
Houston Chronicle quoted Belus Capital Advisors analyst Brian Sozzi as saying anybody who followed corporate America cold see that the two companies had to be joined. He added they were specialty retailers in a price-competitive industry with limited growth prospects.
The Men's Wearhouse's offer stands at $57.50 per share for Jos A Bank, up from its prior offer of $55 per share, or $1.54 billion. Jos A Bank rejected the previous offer in late December, as it found it too low. Men's Wearhouse said it was taking the bid directly to Jos A Bank Clothiers Inc shareholders and it also planned to nominate two people to the Jos A Bank board.
According to commentators 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.
''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,'' Douglas S Ewert, Men's Wearhouse's chief executive, said in a statement.
In its announcement yesterday, the company said it had raised its offer 4.5 per cent, to $57.50 a share, and would start a tender offer for Jos A Bank stock that would expire on 28 March.
Equally significant, it also announced plans for the election of two directors, John D Bowlin and Arthur E Reiner, at Jos A Bank's annual meeting this year.
