Men’s Wearhouse Inc. struck back at Jos. A. Bank Clothiers Inc. 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.
“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.
The last person to push Men’s Wearhouse to sell itself was its founder, George Zimmer, known to U.S. television audiences for his advertising catch phrase, “You’re going to like the way you look – I guarantee it.”
Zimmer was ousted by the board in June after arguing for a sale of the company to an investment group. At the time, he accused the board of trying to silence him for expressing concerns about the direction of the company he founded 40 years ago.
Men’s Wearhouse is serious about acquiring Jos. A. Bank and is not simply trying to force the company to raise its bid for Men’s Wearhouse, according to sources familiar with the process.
Jos. A. Bank confirmed that it had received the acquisition proposal and said it was evaluating it with its advisers. As of August 3, the company had cash and cash equivalents of about $333.2 million and no long-term debt.
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