Jos. A. Bank Clothiers Inc. (JOSB:US) rejected a $1.54 billion takeover proposal from Men’s Wearhouse Inc. (MW:US) as too low. The shares remained above the offer price, indicating investors expect a higher bid.
The Men’s Wearhouse offer “significantly undervalued” the company and wasn’t in shareholders’ best interest, Hampstead, Maryland-based Jos. A. Bank said today in a statement. The company said it would continue to seek its own acquisitions to boost shareholder value. Men’s Wearhouse said in its own statement today that it still is considering ways to “make this combination a reality.”
Jos. A. Bank’s rejection of the offer represents another turn in a takeover battle that it started in October with a $2.3 billion bid for Men’s Wearhouse. The target rejected that offer and later made its own proposal for Jos. A. Bank. Shares of Jos. A. Bank have traded above Men’s Wearhouse’s $55-a-share offer since it made the bid on Nov. 26 and stayed higher than that price today.
“Jos. A. Bank seems to be open to a higher offer,” Mark Montagna, a Nashville, Tennessee-based analyst at Avondale Partners LLC, said in a phone interview. “There’s probably further negotiations. The top shareholders are similar at both companies, and they’re going to want something to get done.”
Montagna said Jos. A. Bank may be valued at $56 to $61 a share. He has the equivalent of a hold rating on the shares.
Men’s Wearhouse said it has a “strong preference” to work collaboratively with Jos. A. Bank. The retailer is considering nominating candidates to Jos. A. Bank’s board at the company’s next annual shareholder meeting.
Men’s Wearhouse, based in Houston, fell (MW:US) 0.7 percent to $51.63 at the close in New York. Jos. A. Bank slipped 1.3 percent to $56.29.
Jos. A. Bank may be seeking an offer of more than $60 a share, a price that may be less appealing to Men’s Wearhouse, said Betty Chen, a San Francisco-based analyst at Mizuho Securities.
“It seems they may be positioning themselves for a higher offer,” Chen said in a phone interview today. “At a certain level it does get more risky.”
She has the equivalent of a hold rating on Men’s Wearhouse’s shares.
Tom Davies, a spokesman for Jos. A. Bank who works for Kekst & Co., declined to comment on what price the company may seek.
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