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Men’s Wearhouse Seen as ‘Fully Valued’

With shares presently above its target price of $40, Stifel has downgraded the stock to a “hold” rating from “buy.”

The Men’s Wearhouse Inc. on Thursday was downgraded by Stifel to a “hold” rating from “buy.”

Stifel’s analyst Richard Jaffe said with shares of Men’s Wearhouse above its target price of $40, the company is “more than fully valued on a fundamental basis.”

Jos. A. Bank Clothiers Inc. said last week that it made a nonbinding $2.4 billion offer to acquire the company at $48 a share, one that Men’s Wearhouse rejected and followed up with the adoption of a poison pill to discourage a takeover.

The offer of $48 a share represents a 42 percent premium to the closing price of $33.71 on Sept. 17, when Jos. A. Bank first reached out to Men’s Wearhouse, and a 17.8 percent premium to the 52-week high and five-year high of $40.75, according to an investor presentation from Goldman Sachs and Financo Inc. that was filed with the Securities and Exchange Commission.

Shares of Men’s Wearhouse ended Thursday’s trading session unchanged at $46.24, although shares hit a high of $46.39 in intraday trading.

Robert N. Wildrick, chairman of Jos. A. Bank, said in an interview, “I am curious why the Men’s Wearhouse board will not at least talk to us. Part of good business judgment is getting all of the facts, so you are leaving no stone unturned.”

He also said that since the proposal was revealed, he has spent most of his time “talking to shareholders who are very eager to do the deal. These are holders of the shares of both companies.”

Wildrick said the company still prefers to do a friendly deal, although he noted that “at this point, we have not ruled anything out.”

A source close to the company said if Jos. A. Bank chose to go hostile, there are different options it could pursue. The individual said some of those options wouldn’t necessarily trigger the poison pill. This person declined to elaborate further.

Jaffe said he believes that Jos. A. Bank’s acquisition of Men’s Wearhouse has a “better than 50 percent chance of being completed.” He also acknowledged that the process could be a “prolonged” one.