Jos. A. Bank Clothiers Inc. (JOSB:US) Chairman Robert Wildrick said he wouldn’t rule out making a hostile bid for Men’s Wearhouse Inc., which turned down his company’s offer last week.
“We want this to happen on a friendly basis,” Wildrick said yesterday in an interview. “But at this point we have not ruled anything out.”
Jos. A. Bank bid $48 a share in an offer disclosed Oct. 9. That proposal, reflecting a 36 percent premium over Men’s Wearhouse’s closing price the previous day, came at a moment of turmoil for the Houston-based company, which cut its profit forecast last month and removed founder George Zimmer as executive chairman over strategy disagreements in June.
Wildrick said he won’t make a new, higher bid without looking at the company’s books. He said he prefers to acquire Men’s Wearhouse (MW:US) with a friendly offer that’s best for the shareholders of both companies.
A hostile bid may not be necessary and Men’s Wearhouse may eventually be open to a bid if an offer meets certain conditions, said a person familiar with the matter who declined to say what the retailer would want.
Ken Dennard, a spokesman for Men’s Wearhouse who works for Dennard-Lascar Associates LLC, didn’t respond to voice-mail and e-mail requests for comment about Wildrick’s remarks.
Other than its Oct. 9 statement turning down the offer, Men’s Wearhouse hasn’t responded to Jos. A. Bank and hasn’t given the Hampstead, Maryland-based company access to its books, Wildrick said.
Men’s Wearhouse said in its statement last week that the $2.3 billion offer undervalues the company and “is not in the best interests of Men’s Wearhouse or its shareholders.”
The company adopted a so-called “poison pill” after the Jos. A. Bank bid that effectively limits any stockholder from acquiring more than 10 percent of the shares.
Combining the companies would create a stronger retailer, as each has strengths that can help the other grow, Wildrick said. The two companies have total annual sales of about $3.5 billion. Macy’s Inc. sells about $5.5 billion a year in menswear, he said.
Shares in both companies rose after Jos. A. Bank announced its offer, indicating shareholder support for a deal, said Erik Gordon, a professor at the University of Michigan’s Ross School of Business in Ann Arbor. If major shareholders in Men’s Wearhouse support the deal, Jos. A. Bank could ride that support and wage a proxy battle, Gordon said.
“Jos. A. Bank can launch a proxy fight to remove MW’s directors, get the poison pills redeemed by new, friendly directors, and do the deal,” he said in an e-mail. “If it goes that way, Men’s Wearhouse’s current board loses its ability to influence a deal. If the current board negotiates, it stays in the game.”
Men’s Wearhouse has operations in Canada, where Jos. A. Bank doesn’t do business, Wildrick said, while his company has stronger Internet sales and could help Men’s Wearhouse grow online.
Wildrick said he wouldn’t close any stores. The two brands reach different buyers with Men’s Wearhouse attracting younger customers and Bank targeting older, more upscale shoppers with more classic styles.
“This isn’t about laying people off to get synergies,” he said. “We have tremendous opportunities to learn from each other. The synergies are in sales and marketing and by growing the business.”
Men’s Wearhouse rose 2 percent to $46.24 yesterday in New York. Jos. A. Bank fell less than 1 percent to $48.86.
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