The Men’s Wearhouse Inc. and Jos. A. Bank Clothiers Inc. are due back in court on March 25 at 10 a.m.
Late Tuesday, Men’s Wearhouse won court approval for expedited proceedings in connection with its lawsuit to bar Jos. A. Bank from acquiring Eddie Bauer.
The hearing to fast track the process was done via a telephone conference before Delaware Chancery Court Vice Chancellor J. Travis Laster.
Men’s Wearhouse initially sought a temporary restraining order, or TRO, against Jos. A. Bank, but that request became a nonissue once Jos. A. Bank agreed to give its men’s retail competitor 10 days notice before the planned closing of the Eddie Bauer deal. According to the court transcript, Laster told Men’s Wearhouse’s counsel that they could return to court to seek a short-term TRO if the 10-day notice was given and a potential deal could be finalized in advance of the March 25 hearing date.
The March hearing will focus on Men’s Wearhouse’s request for a preliminary injunction to bar the Eddie Bauer transaction from happening. It’s only the first step, however. Even if Men’s Wearhouse wins that battle, both parties will still be mired in legal proceedings as they fight each other over whether a permanent injunction should be granted.
In granting Men’s Wearhouse’s motion to expedite, Laster said the retailer made a “credible basis for believing that the Eddie Bauer transaction is defensive,” and that it was in response to a “hostile bid.” He also noted that the features of the Eddie Bauer transaction “totally may well fall outside the range of reasonableness,” noting for example the termination fee and its “alleged magnitude.”
The court also heard from the lawyers for Eminence Capital, an activist investor with stakes in both Men’s Wearhouse and Jos. A. Bank, which has a separate complaint pending in the Chancery Court. Given the dialogue between counsel and the court, it appeared that some of its shareholder claims might be addressed in the Men’s Wearhouse litigation.
As for the separate tender offers on the table, Men’s Wearhouse is likely to go forward with its solicitation of Jos. A. Bank shares, which has a March 12 deadline. That will give the retailer a sense of how many are in favor of its proposed plan to acquire Jos. A. Bank. In turn, there doesn’t seem to be anything stopping Jos. A. Bank, which has its tender expiring on March 18, from buying back shares at $65 each.
Men’s Wearhouse earlier this week upped its offer to acquire Jos. A. Bank in what potentially could be a deal valued at up to $1.8 billion. Jos. A. Bank inked a deal to acquire Eddie Bauer from Golden Gate Capital for $825 million.
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