Men's specialty retailer,
Jos. A Bank Clothiers Inc.
) has abandoned the acquisition bid for
The Men's Wearhouse, Inc.
). The proposal lapsed as Men's Wearhouse failed to engage in
favorable negotiations with Jos. A Bank before the Nov 14
Jos. A Bank had privately communicated an offer to acquire all
outstanding shares of Men's Wearhouse for $48 per share in cash
(the deal was valued at over 40% premium at the time of proposal)
in Sep 2013. However, Men's Wearhouse considered the move as
"opportunistic" and "inadequate", and consequently rejected the
Thereafter, Jos. A Bank sought to negotiate the purchasing price,
provided it would have been allowed to carry out "due diligence".
Though Men's Wearhouse has not shown much interest in the deal,
Jos. A Bank continues to believe that the possible merger has
benefits for both the companies. Further, the company declared
that it is open to discussions if Men's Wearhouse changes its
stance. This keeps the possibility of reviving the annulled
transaction in the future.
Eminence Capital, LLC, the largest shareholder with 9.8% stake in
Men's Wearhouse is greatly upset at the cessation of the takeover
bid. Consequently, it has called for a shareholders' meet to
The failure of the deal, however, is of little surprise to us
given Men's Wearhouse's earlier reactions. Following the bid
rejection, the company had adopted a poison pill (the Rights
Plan) to protect itself against hostile or any other takeover
tactics. The company revealed that its limited period shareholder
rights plan, which expires on Sep 30, 2014, will prevent any
single owner to own more than 10% stake (15% for a passive
institutional investor) in the company.
Men's Wearhouse and Jos. A. Bank carry a Zacks Rank #3 (Hold).
Better performing stocks among apparel-shoe retailers include
Finish Line Inc.
). Both these stocks have a Zacks Rank #2 (Buy).
DSW INC CL-A (DSW): Free Stock Analysis
FINISH LINE-CLA (FINL): Free Stock Analysis
JOS A BANK CLTH (JOSB): Free Stock Analysis
MENS WEARHOUSE (MW): Free Stock Analysis
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