Men's Wearhouse turns tables with bid for Jos. A. Bank

Tue Nov 26, 2013 2:18pm EST
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By Aditi Shrivastava

(Reuters) - Men's Wearhouse Inc MW.N struck back at Jos. A. Bank Clothiers Inc JOSB.O with a $1.5 billion bid to acquire the suit and tuxedo retailer, only weeks after rejecting a takeover offer from its smaller rival.

Men's Wearhouse, under pressure from activist shareholders to merge, offered $55 per share in cash for Jos. A. Bank, a offer that values the smaller retailer's stock at a 9 percent premium to its close on Monday.

Jos. A. Bank shares rose as much as 12.5 percent on Tuesday to a two-and-a-half year high of $56.91, topping the offer in a sign investors might be expecting a better bid. Men's Wearhouse shares rose as much as 12 percent to a year-high.

"For the shareholders of Men's Warehouse and for Jos. A. Bank, Christmas has come early. They will see huge benefits to the merging of these two companies," said Jerry Reisman, an M&A expert at law firm Reisman Peirez Reisman and Capobianco LLP.

The combined company would have 1,700 stores that rent tuxedos and sell suits, a scale that in the past has raised antitrust questions about a merger.

The retaliatory offer from Men's Wearhouse, which the company said implies an enterprise value of about $1.2 billion for Jos. A. Bank, follows pressure from its largest shareholder, New York-based hedge fund Eminence Capital LLC.

Eminence, along with other hedge funds that hold about 30 percent of Men's Wearhouse shares, had tried to persuade other investors to pressure the company into accepting the takeover offer from Jos. A. Bank.

"We are pleased to see that the board of Men's Wearhouse agrees with us and recognizes the substantial benefits of merging with Jos. A. Bank," said Eminence Chief Executive Ricky Sandler.   Continued...

The Men's Wearhouse sign is seen outside its store in Westminster, Colorado September 11, 2013. Men's Wearhouse Inc is due to release their Q2 2013 earnings. REUTERS/Rick Wilking