Men's Wearhouse prepared to raise takeover offer price for rival Jos. A. Bank

Men's Wearhouse Inc, one of North America's largest specialty retailers of men's apparel, yesterday said that it was prepared to increase its takeover offer price for rival Jos. A. Bank Clothiers Inc if it finds additional value through discussions or limited due diligence.

In a letter to Jos. A. Bank's independent directors, Men's Wearhouse urged the directors to form a special committee to reconsider its hostile bid and begin constructive negotiations.

Earlier this month the board of Jos. A. Bank Clothiers rejected a $1.61-billion takeover offer from Men's Wearhouse, saying that the hostile bid is inadequate and opportunistic. (See: Jos. A. Bank urges shareholders to reject $1.61 bn hostile bid from Men's Wearhouse)

Men's Wearhouse's offer of $57.50 per share is up from its prior offer of $55 per share, or $1.54 billion. Jos A Bank had also rejected the previous offer in late December, calling it too low.

The moves signals a new stage in the takeover battle, one that started last year with Jos A Bank, the unwanted bidder, but now in a reversal of roles, the pursuer was the pursued.

In October 2013, Jos A Bank Clothiers launched a $2.3-billion bid to buy its bigger rival Men's Wearhouse, but not only the hostile bid was immediately rejected by its rival, Men's Wearhouse launched a counter $1.54 billion takeover bid and later raised it to $1.61-billion.

In yesterday's letter, Men's Wearhouse said that each of Jos. A. Bank's independent directors ''has a heightened responsibility to serve the best interests of shareholders, without regard to conflicting personal interests.''

It also noted that when Jos. A. Bank launched its unsolicited buyout offer on 18 October 2013 for Men's Wearhouse, Robert Wildrick, chairman of Jos. A. Bank articulated a compelling rationale for merging the two companies.

At that time, Jos. A. Bank was proposing to acquire Men's Wearhouse, and Wildrick was slated to lead the combined business.

Now, when Men's Wearhouse is proposing to acquire Jos. A. Bank, and Wildrick will not be CEO of the combined business, Men's Wearhouse said that rather than engaging in discussions that might lead to that "ideal" combination, Wildrick is pursuing an alternative transaction, including a material acquisition. 

Men's Wearhouse said that Wildrick has a conflict of interest that might naturally make him prefer some other strategic alternative and urged the company to form a special committee of independent directors to re-consider its offer.

Founded in 1905 by Charles Bank, an immigrant from Lithuania, Jos A Bank is one of the leading retailers in  the US of men's classically-styled tailored and casual clothing, sportswear, footwear and accessories.

The Maryland-based company sells its product line in 44 states and the District of Columbia, as well as through a nationally distributed catalogue and an e-commerce website.

Founded in 1973, Texas-based Men's Wearhouse is one of North America's largest specialty retailers of men's apparel.

It operates 1,133 stores under its own name Men's Wearhouse, K&G Superstores - an off-price retail chain featuring discontinued items, Moores Clothing for Men - a Canadian chain of men's clothing stores, Twin Hill Corporate clothing and MW Cleaners in the Houston Area.

Men's Wearhouse has market cap of $2.4 billion, annual sales of about $2.5 billion and 1,137 stores, while Jos. A. Bank has market cap of $1.6 billion, annual sales of $1 billion and 623 stores.