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Eminence, Men’s Wearhouse in Standstill Deal

The agreement further solidifies the hedge fund’s position in support of Men’s Wearhouse Inc.’s intent to acquire Jos. A. Bank Clothiers Inc.

Eminence Capital on Monday entered into a standstill agreement with The Men’s Wearhouse Inc.

The agreement further solidifies the hedge fund’s position in support of Men’s Wearhouse Inc.’s intent to acquire Jos. A. Bank Clothiers Inc. in a bid that could value the rival men’s retailer at up to $1.8 billion, or $65 a share.

Under the terms of the agreement, filed with the Securities and Exchange Commission, Eminence agreed not to solicit proxies or inspect Men’s Wearhouse’s books in connection to the solicitation of shareholder votes.

Back in November, the hedge fund sought to push Men’s Wearhouse’s board to engage in discussions with Jos. A. Bank’s board after the latter first attempted to acquire its competitor. Eminence’s filing with the SEC in November sought from Men’s Wearhouse shareholders a “white agent” designation to call a special meeting to amend certain provisions of the retailer’s bylaws that would make it easier to remove certain board members and allow for a voting change in favor of a majority of shares instead of the more restrictive requirement of two-thirds. Given the recent developments, the hedge fund has agreed in its standstill agreement to withdraw all efforts in connection with the November solicitation it filed with the SEC.

Although Men’s Wearhouse initially rebuffed Jos. A. Bank’s offer, it has since launched one of its own. Men’s Wearhouse’s first attempt was rejected by Jos. A. Bank’s board, and Men’s Wearhouse earlier this week upped its offer, saying it would bid $65 a share for Bank if the retailer called off its $825 million offer for Eddie Bauer. Jos. A. Bank said Monday that its board will review all “aspects of the revised, unsolicited tender offer” and will make a “recommendation to stockholders in due course.”

Eminence holds a 9.9 percent stake in Men’s Wearhouse and a 4.9 percent stake in Jos. A. Bank.

On Tuesday, shares of Men’s Wearhouse slipped 0.5 percent to close at $48.26 in Big Board trading, while those of Jos. A. Bank fell 2.1 percent to $58.78 in Nasdaq trading.