On Friday morning, the retailer said it had terminated its all-cash proposal to purchase the competing men’s specialty store chain for $48 a share after its self-imposed Nov. 14 deadline came and went without any communication between the two firms.
Robert Wildrick, Bank’s chairman, released a letter that was sent to Douglas Ewert, Men’s Wearhouse’s chief executive officer, that read, “The MW board has denied our request for limited due diligence and has failed to engage in any discussions whatsoever regarding our proposal. We are therefore terminating our proposal in order to consider other strategic alternatives which we have been investigating."
Hedge fund Eminence Capital, which owns a 9.8 percent stake in MW, or nearly 4.7 million shares, followed with a filing with the Securities and Exchange Commission seeking from MW shareholders a “white agent” designation. The designation is for the purpose of calling a special meeting to amend certain provisions of the retailer’s bylaws. What it wants specifically is to revert the bylaws to what they were before the most recent changes put through in the last month or so. A reversion would allow the removal of board members, without cause, before the next annual meeting, and allow for a voting change in favor of a majority of shares instead of the more restrictive requirement of two-thirds.
The solicitation is just for the “white agent” designation. The law in Texas, where MW is headquartered, stipulates that holders of 10 percent of the shares entitled to vote are required in order to call a special meeting of shareholders. Eminence is requesting that a special meeting be held on Feb. 14 in New York to amend the bylaws, according to the regulatory filing.
Neither Eminence nor any other shareholder currently is calling for a change in the MW board membership. Even if there is a successful special meeting that results in a reversion of the bylaws, a separate special meeting would have to be called to change MW’s board.
Ricky C. Sandler, ceo of Eminence, said, “In light of the board’s actions, we are forced to launch this initiative that will give shareholders the opportunity to effect important corporate governance changes at Men’s Wearhouse. In our view, the governance changes implemented last month by the board in response to the premium proposal made by Jos. A. Bank, including the imposition of a super-majority vote for shareholder amendments to the bylaws and implementation of a poison pill with a 10 percent threshold, are not in the best interests of shareholders.…We continue to encourage the board to take immediate steps to complete its review of strategic options.…If the board fails to do so, our special meeting initiative will give shareholders the tools to hold the board accountable for its failed leadership.”
Men’s Wearhouse did not respond to requests for comment.
According to Ted D. Rosen, chair of the New York corporate and securities practice for the law firm Fox Rothschild, “The Men’s Wearhouse board viewed the offer as hostile, instead of working with the Jos. A. Bank board to reach an agreement that is in the best interests of shareholders. In today’s environment, boards need to be careful of what deals they do and don’t do.
“In addition to fighting off Jos. A. Bank, the Men’s Wearhouse board now has a fight in the nebulous world called ‘breach of fiduciary duty.’ That’s a huge distraction to the management team,” he added.
While Rosen believes Men’s Wearhouse “botched” the process, he doesn’t believe that the deal itself is over.
According to Rosen, the MW board likely will reconsider its options over the next few weeks. “A director of a public company who has a stock trading at X and gets an offer at a premium [to that] really can’t ignore that offer,” he said.
With that scenario a distant possibility, Jos. A. Bank is looking for greener pastures.
Gilbert Harrison, chairman of Financo Inc., financial adviser to Bank, said the retailer is considering “three or four serious alternatives that fit within the strategy of our business.” He declined to provide any details. “We have $400 million in cash and no debt,” he added. “And we want to put that money to work for our shareholders in terms of an acquisition.”
Wildrick told WWD: “We’ve got a business to run, and we can’t sit and wait and wait. We’re starting to look at other things on our list.” But any acquisition would have to “be accretive to shareholders. We’re not just going to buy something to buy something. We’ve got very tight standards, and if it won’t make sense to do it, we won’t. ”
Harrison said the company continues to be interested in Men’s Wearhouse: “That’s still our first choice.”
The banker said Jos. A. Bank is waiting to “see if Eminence’s actions make Men’s Wearhouse rethink its strategies. If they want to meet, we’re absolutely available and we’re still willing to talk.”
Wildrick also left the door open, saying in the letter to Ewert, “If, in the future, we are invited by the Men’s Wearhouse board to discuss our acquisition of Men’s Wearhouse, or if circumstances were otherwise to change, Jos. A. Bank may consider whether a new proposal to acquire Men’s Wearhouse is warranted.”
@fearofgod and @maxfieldla have teamed up on a pop-up installation. The store, located in the gallery space across from Maxfield’s Melrose Ave location, is the site of the brand’s House of God pop-up in which Fear of God founder @jerrylorenzo has created a church-inspired installation. A dozen vintage church pews sit in front of an LED screen playing 90s gospel singers in an effort to re-create an environment akin to a Southern Baptist Church, Lorenzo explained. Read more about the pop-up on WWD.com #wwdfashion (📷: Jennifer Johnson)
Known for his sleek, sophisticated American glamour, Norman Norell is the subject of an upcoming exhibition at @fitnyc. “Norell: Dean of American Fashion,” which runs from February 9 through April 14, will feature approximately 100 ensembles and accessories. His best work is exemplified by the designer’s glittering “mermaid” gowns frosted with thousands of hand-sewn sequins – like the one pictured. (📷: William Helburn) #wwdfashion
For pre-fall 2018, @balmain didn’t let go of the glitz. A crystal embroidered baseball jacket priced at around $40,000 hangs in the “couture” section of the brand’s first men’s pre-collection. Sporting the words “Balmain Army” across the back, the item took around two months to make. “When it was completed, it was like Christmas, it was like, ‘It’s done, it’s exactly what I wanted,’” said Balmain’s creative director @olivier_rousteing during a tour of the collection in a Paris showroom on Monday. #wwdfashion
Eighty degree temperatures and outdoor installations at the annual Art Basel Miami Beach called for bright, elevated beachwear. See more street style pictures on WWD.com. #theyarewearing #ABMB (📷: @lifeinreverie)
Following September’s emotional tribute to her brother Gianni, Donatella Versace wanted to bring the spring show’s deep sense of intimacy to her @versace_official pre-fall collection. Donatella found inspiration in Versace Palazzo in Milan and from Gianni’s opulent apartment. Archival patterns and new motifs were splashed on silk shirtdresses and fitted jersey frocks. See the rest of the photos on WWD.com. #wwdfashion
Demna Gvasalia continues to shake up the Paris fashion calendar — and experiment with new runway timetables for his @vetements_official brand. WWD has learned that Vetements plans to stage its next coed show for the fall 2018 season on January 19 during Men’s Fashion Week in the French capital. Details about the timing and venue have not been confirmed — stay tuned on WWD.com to catch the latest. #wwdnews (📷: @giovanni_giannoni_photo)
@zacposen's go-to holiday gift? Cookies! "I'll usually bake cookies and send them as a gift," said the designer, who recently released his cookbook "Cooking With Zac: Recipes from Rustic to Refined." Get the recipe for his Brown Butter-Chocolate Chip Cookies via link in bio 🍪🍪🍪 #wwdeye #cookingwithzac
For @monsemaison’s pre-fall 2018 collection, Fernando Garcia and Laura Kim honed in on the brand’s many signatures — men’s wear, which was tweaked and feminized through deconstruction, proportion play and lots of bare shoulders. See the rest of the photos on WWD.com #wwdfashion (📷: George Chinese)
On Friday night, @yohjiyamamotoofficial received the Design for Asia Lifetime Achievement Award in Hong Kong. The 75-year-old designer has been celebrated for many years and is best known for his dark and avant-garde tailoring. “In my long career, in design, architecture, [I’ve been to] so many parties, this is the very first time that I have such a warm feeling, I really appreciate this,” Yamamoto said. #wwdfashion (📷: @dominiquemaitre)