By Dow Jones Business News,
January 13, 2014, 08:25:00 AM EDT
Men's Wearhouse Inc.'s largest shareholder threw its weight behind the retailer's hostile bid for rival Jos. A. Bank
Clothiers Inc. and went to court to press its case.
The moves could complicate any effort by Jos. A. Bank to fend off its rival.
Eminence Capital LLC, which has a nearly 10% stake in Men's Wearhouse and a nearly 5% stake in Jos. A. Bank, sent a
letter to Jos. A. Bank's board Monday declaring its support for Men's Wearhouse's$1.6 billion offer for Jos. A. Bank.
Separately, Eminence filed a complaint in the Delaware Court of Chancery seeking to block Jos. A. Bank from making an
acquisition that Eminence says could impede Men's Wearhouse's bid for the company.
Eminence's support of Men's Wearhouse's bid will likely make it more difficult for Jos. A. Bank to make its own offer
for Men's Wearhouse, as shareholders of both companies will be crucial in determining the outcome of the long-running
merger drama, which began in September with a bid by Jos. A. Bank to buy Men's Wearhouse.
A Men's Wearhouse purchase of Jos. A. Bank "provides the best path for shareholders to realize the significant value
inherent in the combination of both companies," Eminence Chief Executive Ricky Sandler wrote in the letter.
"Furthermore," he wrote, "we firmly believe that you will not be able to deliver comparable value to shareholders
through any other strategic transaction or action available to you."
In the letter, Eminence also urges Jos. A. Bank to negotiate with Men's Wearhouse.
A spokeswoman for Jos. A. Bank declined to comment on Eminence's support for Men's Wearhouse's offer and had no
immediate comment on the complaint.
Eminence has been a strong proponent of a combination of the two companies, arguing publicly that a deal could produce
$2 billion of cost-saving and other gains for shareholders. The hedge fund hasn't previously opined publicly, however,
on how the deal should be done.
It isn't clear why Eminence believes Men's Wearhouse should be the acquirer in any deal. With a market value of $2.4
billion, Men's Wearhouse is roughly 50% bigger than its rival.
Executives of Jos. A. Bank have said recently it may pursue an acquisition of another company. If Jos. A. Bank were to
make such a move, it could make it harder for Men's Wearhouse to pull off a takeover of the company, in part by making
it more expensive.
"Absent this court's exercise of its equitable powers, the members of the Jos. A. Bank board will succeed in killing a
highly attractive business combination, destroying the value of Jos. A. Bank's shares through an ill-advised
acquisition, and entrenching themselves," Eminence's complaint reads.
The complaint doesn't name a takeover target.
The support from Eminence for Men's Wearhouse contrasts with the tenor of the takeover battle during its early days,
when Eminence criticized Men's Wearhouse for refusing to negotiate a deal with Jos. A. Bank.
Eminence's move is the latest twist in one of the more colorful and unpredictable takeover battles in recent years.
Jos. A. Bank has said it would respond to Men's Wearhouse's offer, which values the company at $57.50 a share, by
Friday. Men's Wearhouse has said it would nominate two directors to Jos. A. Bank's board.
Write to Dana Cimilluca at firstname.lastname@example.org
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