The board of directors of
Jos. A. Bank Clothiers Inc.
) appear adamant on their stand and have yet again rejected rival
The Men's Wearhouse Inc.
) proposal last week of raising the acquisition bid further. In a
letter to the Men's Wearhouse board, Jos. A. Bank directors made
it clear that a merger between the companies is not possible as
they believe it is not in the best interest of the shareholders.
The company refused to engage in any negotiations with Men's
Wearhouse stating that it sees no benefits from the talks.
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Revealing a separate story,
Wall Street Journal
on Saturday brought to the lime light the ongoing talks between
Jos. A. Bank and retailer Eddie Bauer Inc., for a potential
purchase of the latter by the former. Eddie Bauer is owned by
private equity firm Golden Gate Capital. However, complete
details on the story are yet to be disclosed.
Last week, Men's Wearhouse approached the independent directors
of Jos. A. Bank Clothiers Inc. urging them to reconsider its
all-cash offer of $57.50 per share or approximately $1.6 billion
and proposing to further raise the bid, if needed. This move by
Men's Wearhouse indicated its intention to complete the
acquisition as soon as possible since its offer will expire on
In its letter, Men's Wearhouse insisted that Jos. A. Bank's
independent directors form a committee and re-evaluate its offer.
The former wanted Jos. A. Bank to consider the earlier rejection,
which had taken place without entering into any negotiation. The
company also stated that it is ready to increase its bidding
offer if the committee finds any additional value necessary.
The move came after Jos. A. Bank rejected Men's Wearhouse's offer
on Jan 20, stating that the bid was inadequate and significantly
undervalued the company on grounds of its near and long-term
Earlier, on Jan 6, 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
nominate two independent director candidates to Jos. A. Bank's
board election at its 2014 Annual Meeting. The names proposed for
nomination include John D. Bowlin and Arthur E. Reiner. Further,
the company took to Jos. A. Bank's shareholders, urging them to
consider its offer, in order to push management into entering
Men's Wearhouse's latest 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 earnings before interest, taxes,
depreciation and amortization (EBITDA) multiple.
Men's Wearhouse's earlier 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 'tug of war' between Jos. A. Bank and Men's Wearhouse began
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 #3 (Hold). Other
stocks performing well in the apparel-shoe space include
Christopher & Banks Corp.
Abercrombie & Fitch Co.
). Of these, Christopher & Banks has a Zacks Rank #1 (Strong
Buy), while Abercrombie & Fitch carries a Zacks Rank #2