In the latest development on the takeover battle between the
two men's clothing retailers,
The Men's Wearhouse Inc.
) 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. This move by Men's Wearhouse
indicates its intention to complete the acquisition as soon as
possible since its offer will expire on Mar 28.
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
In its letter, Men's Wearhouse has insisted that Jos. A.
Bank's independent directors form a committee and re-evaluate its
offer. It wants them to consider the earlier rejection by Jos. A.
Bank, 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
The market reacted positively to the recent development as the
share price of Men's Wearhouse and Jos. A. Bank rose
approximately 2% and 1.6%, respectively yesterday.
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
ABERCROMBIE (ANF): Free Stock Analysis Report
CHRISTOPHER&BNK (CBK): Free Stock Analysis
MENS WEARHOUSE (MW): Free Stock Analysis
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