Men’s Wearhouse’s latest bid still doesn’t suit Jos. A. Bank
February 5, 2014 01:52 PM
Jos. A. Bank Clothiers Inc. has turned down the latest sweetened purchase offer from The Men's Wearhouse Inc., saying it continues to undervalue the company.
In a letter to Douglas Ewert, Men’s Wearhouse’s president and CEO, Jos. A. Bank chairman Robert Wildrick cited several reasons to “question the credibility” of Men’s Wearhouse’s actions related to its attempted buyout. The key reason involves concerns about antitrust issues that arose last year when Jos. A. Bank offered to acquire Men’s Wearhouse. Wildrick’s letter notes that Men’s Wearhouse rejected Jos. A. Bank’s acquisition proposal last fall because the combination raised antitrust concerns, but that Ewert has not addressed the antitrust issues since Men’s Wearhouse made its initial counter bid for Jos. A. Bank in late November, according to a copy of the letter circulated by Jos. A. Bank and signed by all of its directors. Wildrick’s letter was written in response to one written by Ewert dated Jan. 30 stating that Men’s Wearhouse’s latest offer “would provide your shareholders with a substantial premium and immediate and certain value.”
The Federal Trade Commission reviewed the Men’s Wearhouse offer and issued a second request for information, says Jos. A. Bank, which it calls a “very serious step.” Jos. A. Bank says that a “high percentage” of the transactions in which the FTC makes a second request, less than 2%, “are never completed.” Wildrick’s letter, dated Feb. 2, asserts Men’s Wearhouse should have warned stockholders of both companies of the FTC’s second-request implications.
In early January, Men’s Wearhouse upped its bid to about $1.6 billion to acquire all outstanding shares of Jos. A. Bank for $57.50 per share, compared with an earlier bid of $55 per share in November. Jos. A. Bank considered the latest offer from Men’s Wearhouse to be a hostile takeover and lowered from 20% to 10% the ownership level to acquire shares of common stock.
Jos. A. Bank, No. 191 in the Internet Retailer 2013 Top 500 Guide on Dec. 23 rejected an offer valued at $1.2 billion to be acquired by The Men’s Wearhouse (No. 294).
In a new twist in the buyout saga, multiple media outlets reported in the past several days that Jos. A. Bank is in talks to acquire outdoors apparel and gear retailer Eddie Bauer LLC (No. 101) from majority owner Golden Gate Capital. The San Francisco-based private equity firm won a bankruptcy auction for Eddie Bauer Holdings Inc. in 2009 with an all-cash bid of $286 million.
Golden Gate Capital declined to comment on the Eddie Bauer reports as did Jos. A. Bank.
If Jos. A. Bank and Men’s Wearhouse do merge, the result would be an e-commerce operation with collective annual web sales of about $160 million.