That seemed to be Jos. A. Bank Clothiers Inc.’s attitude Friday when it amended its shareholder rights plan — or “poison pill” — to kick in when an unsolicited party acquires a 10 percent stake in the company. That’s half the threshold that’s been in its bylaws since 2007.
The reduction aligns the threshold level with that of its archrival The Men’s Wearhouse Inc., which has been both its acquisition target and suitor in recent months. Men’s Wearhouse spurned an offer to be taken over by Bank for $48 a share, or about $2.4 billion, in November and then turned the tables on its smaller competitor with a $55-a-share, or $1.54 billion, bid that was rejected on Dec. 23.
Both companies characterized the offers they received as undervaluing their respective targets.
The Bank adjustment to its poison pill carries the acrimony between the nation’s two largest men’s wear chains into the new year.
Bank said, “In light of the hostile actions The Men’s Wearhouse Inc. has taken and threatened to take against the company, which are not in the best interest of the company’s shareholders, the board felt it was appropriate to protect the company’s shareholders by leveling the playing field and ensuring that the Jos. A. Bank rights agreement has the same triggering ownership threshold as that of the Men’s Wearhouse rights agreement.”
Poison pills allow shareholders to buy additional shares at a discount, diluting the holdings of potential acquirers and raising the cost of a possible acquisition. They’ve been used by companies including J.C. Penney Co. Inc. and Aéropostale Inc. in the past year as they’ve faced the possibility of unwanted takeover efforts as falling stock prices made their shares — and larger stakes — more affordable.
When its bid for Jos. A. Bank was rejected last month, Men’s Wearhouse said it was its “strong preference to work collaboratively with Jos. A. Bank to realize the benefit of this transaction.” But its board said “we are continuing to carefully consider all of our options to make this combination a reality, including nominating director candidates at Jos. A. Bank’s next annual meeting of shareholders.”
The ongoing battle between the two men’s wear giants pits the larger Fremont, Calif.-based Men’s Wearhouse, with annual sales of about $2.5 billion, against Hampstead, Md.-based Bank, with sales of about $1 billion. Although both have faced sales stumbles in recent quarters, Men’s Wearhouse enjoys a larger, international footprint, including its Moores stores in Canada and operations in the U.K. A more verticalized operation, Jos. A. Bank sports stronger margins.
Eminence Capital holds a 9.8 percent stake in Men’s Wearhouse and had pressured the firm to pursue a deal. It holds a smaller, unspecified stake in Jos. A. Bank as well.
In Friday trading, Jos. A. Bank shares fell 0.5 percent to $54.41 while Men’s Wearhouse’s rose 0.4 percent to $50.59.
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