In a latest development on the tug of war between
The Men's Wearhouse Inc.
Jos. A. Bank Clothiers Inc.
), 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.
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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
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
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
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.
Christopher & Banks Corporation
), both of which carry a Zacks Rank #2 (Buy).