MEN’S WEARHOUSE, MAY IN BID FOR BROOKS BROS.
Byline: Jean E. Palmieri / With contributions from James Fallon / Samantha Conti, Milan
NEW YORK — The Men’s Wearhouse Inc. and The May Department Stores Co. are among the first-round bidders for Brooks Bros., along with the specialty chain’s former chief executive officer, according to market sources.
As reported, preliminary indications of interest on Brooks Bros. were due last week. The venerable specialty-store chain was put on the block by Marks & Spencer PLC in March but the “book,” or official offering memorandum, was not issued until mid-June.
An M&S spokeswoman in London said the British company was pleased with the level of interest in Brooks Bros. but declined to reveal the number of bids received or the identities of the companies.
M&S plans to select a short list of bidders this week and will begin discussions with them to determine their level of interest. The spokeswoman would not say how many companies would be selected, but she said further news about the bidding for Brooks Bros. won’t be released until late September or early October. This is slightly later than the company originally had expected. M&S originally was hoping to complete a sale of the chain by late summer.
Sources in the U.S. said that May Co. and Men’s Wearhouse remain the front-runners. However, a dark-horse candidate is former Brooks Bros. ceo William Roberti. The chairman and ceo, and an equity owner of Duck Head Apparel Co., made a deal last week to sell his company to Tropical Sportswear International for $16 million. Roberti is believed to be working with an unidentified financial partner to raise the money to buy the chain he led from 1988 to 1994.
Joseph Gromek, Brooks Bros.’ current ceo, also is reported to be part of a bid financed by a “strategic buyer,” sources said, possibly Texas Pacific, owner of Bally.
In addition, Diego Della Valle, owner of the Della Valle Group, Brooks Bros. licensee in Italy, said last week that he was not interested in buying the company. “You won’t find our name on that list,” he said referring to the first-round bidders for Brooks Brothers.
Other potential bidders include Luxottica SpA, Brooks Bros.’ eyewear licensee, and Dickson Concepts, which has a franchise agreement with Brooks Bros in Southeast Asia.
M&S paid $750 million for Brooks Bros. in 1988, and is reportedly seeking between $400 million and $500 million for the business. Sources said, however, that with an operating profit as a percentage of sales of 4.5 percent last year and 2 percent in 1999, the business is worth closer to $200 million.
The bidder with the deepest pockets is May Co., which moved into specialty retailing last year by buying the 110-unit David’s Bridal for $436 million. If May Co. is successful in purchasing Brooks Bros., it can use the label as the upscale men’s wear line in its department stores, sources said. It also is expected to operate the majority of the 155 U.S. and 85 Japanese stores.
But Men’s Wearhouse is viewed as the most synergistic buyer. It could absorb the company into its already-existing infrastructure and operate the stores as its more upscale men’s wear offering. The $1.25 billion company already has three divisions: the flagship Men’s Wearhouse chain; Moores, a specialty chain in Canada, and K&G, its value-priced weekend-warrior division. It also would give the company a foothold in women’s wear. Last year, the company began testing a K&G Ladies concept in Atlanta.
The proposed sale of Brooks Bros. is part of a larger plan by the struggling M&S to pull out of the U.S. market. In addition to the specialty chain, it also is selling its Kings Super Markets.