Jos. A. Bank Shareholder Pushes for Merger - Analyst Blog

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In a latest development on the tug of war between The Men's Wearhouse Inc. ( MW ) and Jos. A. Bank Clothiers Inc. ( JOSB ), Eminence Capital LLC, which owns 4.9% stake in Jos. A. Bank, pushed the latter to cut a deal with Men's Wearhouse and facilitate a merger of the two companies. To ensure that Jos. A Bank works efficiently towards the collaboration, the hedge fund firm announced its plans to put forward two nominees on the company's board at the 2014 shareholders meeting.

Eminence Capital revealed that the primary objective of this step is to support Men's Wearhouse's board nominees and it will withdraw its nominees if Men's Wearhouse is moves ahead with its decision to nominate members to Jos. A. Bank's board at the latter's annual meeting.

Eminence Capital, a majority stakeholder in Men's Wearhouse, has shown its support for the merger since Jos. A. Bank's first acquisition bid. Earlier, the firm had pushed Men's Wearhouse to enter into talks for an alliance when it rejected Jos. A. Bank's proposal.

Last week, Men's Wearhouse raised its acquisition bid to $57.50 per share or $1.6 billion in order to woo Jos. A. Bank and its shareholders. Prior to this, in Nov 2013, the company had offered to acquire all shares of Jos. A. Bank in an all-cash transaction worth $1.2 billion or $55 per share.

Additionally, Men's Wearhouse communicated its intention to deliver a notice to Jos. A. Bank for nominating two independent director candidates for election at its 2014 Annual Meeting. The names proposed for nomination include John D. Bowlin and Arthur E. Reiner. Further, the company took the offer to Jos. A. Bank's shareholders urging them to tender into its offer, in order to push the board of directors of Jos. A Bank into healthy negotiations.

Men's Wearhouse's fresh proposal values Jos. A. Bank at a 38% premium over the latter's closing price on the day prior to the announcement of Jos. A. Bank's proposal to buy Men's Wearhouse (Oct 8, 2013) and a 52% premium to Jos. A. Bank's unaffected enterprise value. It also represents a 9.4x enterprise value to the trailing 12-month adjusted EBITDA multiple.

Men's Wearhouse's previous bid represented a 32% premium over Jos. A. Bank's closing price on Oct 8, 2013. Moreover, it implied a 45% premium to the target's enterprise value and a 9.1x enterprise value to the trailing 12-month adjusted EBITDA multiple.

The Jos. A. Bank and Men's Wearhouse 'tug of war' commenced in Oct 2013, when Jos. A. Bank had proposed to buy Men's Wearhouse for $48 per share or a total of $2.3 billion cash. The bid offered a 42% premium to the latter's closing share price at the time of the proposal as well as a premium to the highest traded price of Men's Wearhouse in the last five years.

Men's Wearhouse currently has a Zacks Rank #2 (Buy). Other stocks performing well in the apparel-shoe space include Finish Line Inc. ( FINL ) and Christopher & Banks Corporation ( CBK ), both of which carry a Zacks Rank #2 (Buy).



CHRISTOPHER&BNK (CBK): Free Stock Analysis Report

FINISH LINE-CLA (FINL): Free Stock Analysis Report

MENS WEARHOUSE (MW): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CBK , FINL , JOSB , MW

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