Men's Wearhouse finally seals $1.8-bn deal to acquire Jos A Bank
14 Mar 2014
Men's Wearhouse Inc finally sealed a $1.8-billion deal to acquire Jos A Bank Clothiers, bringing an end to a five month merger battle between the two US apparel retailer giants.
The transaction is one of the rare acquisitions where Jos. A. Bank initially tabled a hostile bid for its larger rival, but Men's Wearhouse turned the tables by launching a successful counter bid for its smaller rival.
Jos. A. Bank yesterday agreed to be acquired by Men's Wearhouse for $65 a share in cash, or $1.8 billion, a premium of 5.1 per cent to Jos A Bank's Monday closing price, but a 56 per cent premium to the stock's price on 8 October 2013, before the merger battle began.
Men's Wearhouse, which raised its last offer price of $63.50 per share to $65 a share, said that the deal that will become the country's fourth-largest men's apparel chain with 1,700 stores in the US and revenues of $3.5 billion.
The merger saga began in October, when Jos. A. Bank launched a$2.3 billion hostile takeover bid for Men's Wearhouse, which not only rejected the bid but launched a $55 a share counter offer. (See: Men's Wearhouse rejects Jos A Bank's $2.3-bn unsolicited bid)
Jos. A. Bank rejected the bid and adopted the ''poison pill'' strategy and agreed to buy outdoor clothing retailer Eddie Bauer from private equity firm Golden Gate Capital, for $825 million, a move designed to block Men's Wearhouse's takeover attempts.
Since then Men's Wearhouse pursued Jos A Bank relentlessly and although raised its offer twice, but said it would be willing to pay more if allowed conduct due diligence.
Early this month Men's Wearhouse increased its offer to $63.50 per share from its previous $57.50 offer and Jos A Bank agreed to talk and offered limited due diligence.
"We are pleased to have reached this agreement with Jos. A. Bank, which we believe will deliver substantial benefits to our respective shareholders, employees and customers," said Doug Ewert, president and CEO of Men's Wearhouse.
"Together, Men's Wearhouse and Jos. A. Bank will have increased scale and breadth, and Jos. A. Bank's strong brand and complementary business model will broaden our customer reach," he added.
Robert Wildrick, chairman of the Board of Jos. A. Bank, said, "Our board has been rigorously focused on pursuing a path for our shareholders that maximizes value creation ....... The transaction we are announcing today clearly reflects the success of our efforts, providing a substantial premium over any price at which our stock has ever traded, including a 56 per cent premium since our interest in Men's Wearhouse became public last October.''
Men's Wearhouse said that the merger will generate synergies of between $100 to $150 million over three years, and Jos. A. Bank has agreed to terminate its proposed deal with Eddie Bauer.
