Jos. A. Bank to buy Eddie Bauer in bid to stay independent

Fri Feb 14, 2014 3:08pm EST
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By Siddharth Cavale

(Reuters) - Men's clothing retailer Jos. A. Bank Clothiers Inc JOSB.O, the target of an unwelcome bid from rival Men's Wearhouse Inc MW.N, said it would buy outdoor clothing retailer Eddie Bauer for $825 million in its latest effort to stay independent.

Jos. A. Bank said it had reviewed both a possible acquisition of, and sale to, Men's Wearhouse but had determined that the Eddie Bauer deal and a share buyback that it also announced on Friday would provide best value for shareholders.

"(Jos. A. Bank) is doing everything to secure its independence," said Jerry Reisman, an M&A expert at law firm Reisman Peirez Reisman and Capobianco LLP.

The company will pay $564 million in cash and issue about 4.7 million new shares at $56 each to an affiliate of Golden Gate Capital, the ultimate parent of Eddie Bauer.

The private equity firm will end up controlling about 16.6 percent of Jos. A. Bank and have the right to name two directors.

Golden Gate also has the right to a $50 million cash earn-out based on this year's results at Eddie Bauer, a retailer of sportswear, outerwear, gear and accessories for outdoor activities.

The private equity firm bought Eddie Bauer, founded in Seattle in 1920, for $286 million at a bankruptcy auction in 2009.

Jos. A. Bank said it would start a $300 million tender offer immediately after the deal closes to buy back 4.6 million shares at $65 each, a premium of 18.4 percent to the stock's close of $54.92 on Thursday.   Continued...

A sign outside the Jos. A.Bank store is seen in Broomfield, Colorado February 14, 2014. REUTERS/Rick Wilking