Bloomberg News

Jos. A. Bank Seeks New Targets as Men’s Wearhouse Bid Lapses (1)

November 15, 2013

Pedestrians Pass a Men's Wearhouse Store in New York

Men’s Wearhouse in October rejected the $48-a-share proposal, saying the bid undervalued the company and wasn’t in the best interest of investors. Photographer: Mati Milstein/Bloomberg

Jos. A. Bank Clothiers Inc. (JOSB:US) Chairman Robert Wildrick said he’s evaluating new takeover targets for the century-old retailer of men’s apparel, after abandoning a proposed $2.3 billion cash bid for Men’s Wearhouse Inc. (MW:US)

A Nov. 14 deadline set by the suitor passed without Men’s Wearhouse engaging in discussions, Jos. A. Bank said today in a statement. While Wildrick said a deal with Men’s Wearhouse still makes sense, he said Jos. A. Bank will move on to other strategic acquisitions.

“The main thing we’re looking for is something similar to what we’re doing.” Wildrick said in a telephone interview today. “Men’s Wearhouse was at the top of our list of strategic alternatives, now we have to look at the other things on our list.”

He declined to name other potential targets.

While the expiring deadline means Jos. A. Bank’s original offer won’t be accepted, the fight over the future of Houston-based Men’s Wearhouse hasn’t ended. Men’s Wearhouse’s largest investor, Eminence Capital LLC, said it will seek a special meeting of shareholders. Eminence, a New York-based hedge fund which earlier this month disclosed a 9.8 percent stake in Men’s Wearhouse, had pushed the retailer to pursue its rival’s overtures.

“We are disappointed that Men’s Wearhouse has so far failed to engage in merger discussions with Jos. A. Bank,” Eminence Chief Executive Officer Ricky Sandler said in a statement. “Our special-meeting initiative will give shareholders the tools to hold the board accountable for its failed leadership.”

Too Low

Men’s Wearhouse in October rejected the $48-a-share proposal, saying the bid from the Hampstead, Maryland-based company undervalued the retailer and wasn’t in the best interest of investors. Jos. A. Bank’s offer came at a moment of turmoil for Men’s Wearhouse, which cut its profit forecast (MW:US) in September and removed founderGeorge Zimmer as executive chairman over strategy disagreements in June.

Men’s Wearhouse stock (MW:US)rose 1.1 percent to $46.63 at the close in New York. Jos. A. Bank gained 0.8 percent to $50.72.

Ken Dennard, a Men’s Wearhouse spokesman who works for Dennard-Lascar Associates LLC, didn’t immediately respond to voice mail and e-mail requests for comment.

Men’s Wearhouse Chief Executive Officer Doug Ewert said in a Nov. 4 statement that the retailer’s own strategic plan would create more value than the offer from Jos. A. Bank. The board declined Jos. A. Bank’s request for access to nonpublic information for limited due diligence. Jos. A. Bank said in an Oct. 31 letter it would explore other strategic options if Men’s Wearhouse didn’t engage in discussions.

Reckless, Misinformed

Eminence said in a letter to the Men’s Wearhouse board last week that while it agreed that Jos. A. Bank’s offer price was too low, the company’s other reasons for rejecting the bid were “disingenuous at best and reckless and misinformed at worst.”

Men’s Wearhouse last month adopted a shareholder rights plan after rejecting the offer. The plan, which expires Sept. 30, 2014, allows investors to acquire Men’s Wearhouse stock at a discounted price when someone buys 10 percent or more of the company’s common shares in a transaction not approved by the board. If the buyer is a passive institutional investor, the trigger is a 15 percent stake.

To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net


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Companies Mentioned

  • JOSB
    (Jos A Bank Clothiers Inc)
    • $64.98 USD
    • -0.03
    • -0.05%
  • MW
    (Men's Wearhouse Inc/The)
    • $56.92 USD
    • -0.94
    • -1.65%
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