The Federal Trade Commission has given a thumbs-up to the merger of Men’s Wearhouse Inc. and Jos. A. Bank Clothiers Inc., saying it was “not likely to harm consumers because of competition from other sources.”
Men’s Wearhouse said Friday that the FTC granted a termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, clearing the way for the $1.8 billion merger to proceed. Under the terms of the deal, Men’s Wearhouse will acquire all outstanding shares of common stock of Jos. A. Bank for $65 a share in cash. Once the merger is finalized, the combined company will have more than 1,700 stores and sales of $3.5 billion.
Sources said the FTC’s investigation was exhaustive and lengthy, but ultimately found that consumers have many other sources from which to buy men’s suits or rent tuxedos, including Macy’s Inc., Kohl’s Corp., J.C. Penney Co. Inc., Nordstrom Inc. and Brooks Brothers Group Inc.
“We are pleased to have received the termination of the HSR Act waiting period and expect to close the transaction within approximately the next 30 days,” said Doug Ewert, president and chief executive officer of Men’s Wearhouse. “Together, Men’s Wearhouse and Jos. A. Bank will have increased scale and breadth, and Jos. A. Bank’s strong brand and complementary business model will broaden our customer reach.”
He said that within three years, annual savings from the combination would come to between $100 million and $150 million “through improving purchasing efficiencies, optimizing customer service and marketing practices, and streamlining duplicative corporate functions. Additionally, Men’s Wearhouse’s vertical direct sourcing model will be leveraged to improve combined merchandising and sourcing across the combined company and rationalize inventory over time. We expect the transaction will be accretive to Men’s Wearhouse’s earnings in the first full year.”
The last hurdle the deal needs to clear in order to be finalized is for Jos. A. Bank shareholders to tender their shares to Men’s Wearhouse. The current tender offer is scheduled to expire at 5 p.m. on Thursday, but sources said that date is likely to be extended and the deal will most likely close by the end of the month after Men’s Wearhouse finalizes its financing and the shares are tendered.