After months of sparring, The Men’s Wearhouse Inc. and Jos. A. Bank Clothiers Inc. are actively talking about a deal.
The two largest U.S.-based men’s specialty chains have approved terms of a nondisclosure agreement, to serve as a rule book as discussions proceed, and Men’s Wearhouse said it received a draft merger agreement from Jos. A. Bank, details of which weren’t disclosed.
Jos. A. Bank’s board on Thursday rejected Men’s Wearhouse’s $63.50 a share, or $1.78 billion, takeover offer. Men’s Wearhouse reiterated on Monday it is willing to increase the offer price to $65 a share, or about $1.82 billion, if Jos. A. Bank can demonstrate or “Men’s Wearhouse can discover additional value through discussions or limited due diligence.”
In a sign the equity markets are optimistic about a deal, shares of Men’s Wearhouse picked up 0.6 percent on Monday to $54.10 while Jos. A. Bank’s added 0.4 percent, closing at $62.31. The S&P 500 Retailing Industry Group joined the major indices in retreat, finishing down 0.5 percent at 932.63, as the Ukrainian crisis showed no signs of an early resolution.
An obvious point of contention will be Jos. A. Bank’s agreement to acquire Eddie Bauer Holdings Inc. from Golden Gate Capital for $825 million in cash and stock. Jos. A. Bank has been in the hunt for an acquisition since before its unsuccessful bid in the fall to acquire Men’s Wearhouse for $2.4 billion, with support from Golden Gate.
Before the two retailers agreed to talks last week, Eminence Capital amended its lawsuit against Jos. A. Bank to stop the chain from buying Eddie Bauer, a move that it had previously said “defies industrial logic.” Eminence is Men’s Wearhouse’s largest shareholder with 9.9 percent of its outstanding shares and a 4.9 percent owner of Jos. A. Bank. It has vigorously pushed for a merger of the two firms.
Jos. A. Bank previously rejected an offer of $57.50 a share, or $1.61 billion, from Men’s Wearhouse.
Men’s Wearhouse’s $62.50 tender offer for Jos. A. Bank shares is set to expire at 5 p.m. Eastern Standard Time on March 12, unless extended by Men’s Wearhouse.