Jos. A. Bank (JOSB) Rejects Men’s Wearhouse Bid, In Talks with Eddie Bauer

By: , dated February 3rd, 2014

Shares of Jos. A. Bank Clothiers Inc. (JOSB) were down -2.60 or -4.67 percent to $53.11 per share in pre-market trading on Monday after the company announced on Sunday it was rejecting the latest bid from The Men’s Wearhouse Inc. (MW). Citing the offer “undervalues” the company, in a letter written by Jos. A. Bank’s board to Douglas S. Ewert, The Men’s Wearhouse Chief Executive Officer and Director. Jos. A. Bank stock closed up +0.51 or +0.92 percent to $56.22 per share on Friday. The

Elsewhere, according to a Reuters’ article over the weekend, an unnamed source has confirmed that Jos. A. Bank was in talks with Golden Gate Capital for the acquisition of Eddie Bauer. Eddie Bauer Holdings was sold to Golden Gate Capital in 2009 for $286 million and the assumption of the company’s substantial debt.

Hampstead, Maryland based Joseph A. Bank Clothiers, was established in 1905 and sells upscale clothing and footwear through more than 600 stores in 42 states as well as through catalog sales and their website. Eddie Bauer is a retailer best known for rugged outdoor gear and sportswear. The company operates 370 stores and is based in Bellevue, Washington.

Jos. A. Bank and Men’s Wearhouse have been in a bitter battle that began last October with Jos. A. Bank’s $2.3 billion or $48 per share bid for Men’s Wearhouse. The offer was rejected and Men’s Wearhouse counterbid for Jos. A. Bank with a $55 per share offer, which was rebuffed in late December. On January 5th, Men’s Wearhouse sweetened their bid to $57.50 per share.

On January 30th, Men’s Wearhouse sent a letter to Jos. A. Bank offering to sweeten the deal further under certain conditions. The letter from Jos. A. Bank’s board rejecting the offer stated, “After carefully reviewing your offer with our financial and legal advisors, we continue to believe that your offer to acquire Jos. A. Bank substantially undervalues our Company and that your proposal is not in the best interests of our stockholders. Accordingly, we see no benefit in commencing negotiations with Men’s Wearhouse.”

In addition, in opposition to Jos. A. Bank’s offer last fall, Men’s Wearhouse said that a combination of the two companies “raises significant antitrust concerns”. The letter stated, “Men’s Wearhouse has yet to explain why the antitrust concerns it raised just seven weeks before its offer for Jos. A. Bank do not apply to its offer for Jos. A. Bank. Your silence has been misleading to both Jos. A. Bank and Men’s Wearhouse stockholders.”

The company’s current talks to buy Eddie Bauer are the latest tactic to fend off Men’s Wearhouse aggressive bid. Nevertheless, Men’s Wearhouse is attempting to place two people on Jos. A. Bank’s board, which would allow them to change the chairman and the director.

Jos. A. Bank stock has appreciated +47 percent over the last year. The combination with Eddie Bauer, while unusual, could deter Men’s Wearhouse and add to Jos. A. Bank’s bottom line, and in turn make the company’s stock appreciate further.

Other News About Jos. A. Bank
Eminence Backs Men’s Wearhouse (MW) in Jos. A. Bank (JOSB) Battle
Major investor in both companies backs the Men’s Wearhouse.
More pressure on Jos. A. Bank Clothiers to merge
Major shareholders pressure the board to merge.

Other Stocks in the News
Thomson Reuters Taps Into Twitter For Big Data Sentiment Analysis
Reuters now using sentiment analysis provided by Twitter.
Goldman bets on Russian consumer with fitness deal
Goldman buying fitness clubs in Russia.

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Jay Hawk Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

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