Over the last two months, Men's Wearhouse (NYSE: MW) has rejected Jos. A. Bank's (Nasdaq: JOSB) $2.3 billion takeover bid, but now the retailer's largest investor, Eminence Capital LLC, is encouraging the company to reconsider the acquisition proposal.
Hedge fund Eminence Capital revealed in an SEC filing on Thursday, Nov. 7, that it had taken a 9.8 percent stake, or 4.7 million shares, in Men's Wearhouse Inc. In a letter sent to Men's Wearhouse board members included in the filing, Eminence Capital said the reasons for turning down the Jos. A Bank bid were "reckless and misinformed," though it agreed with Men's Wearhouse that the $2.3 billion offer was too low.
"We believe there are significant synergies available to a Men's Wearhouse-Jos. A. Bank combination giving the buyer substantial room to pay above a fair stand-alone price and still earn a healthy return," Eminence said in a letter to the board, reports The Wall Street Journal. "Therefore, we believe there is a price materially above $48 that Jos. A Bank should be willing to pay and that appropriately compensates Men's Wearhouse shareholders."
Eminence maintains that Men's Wearhouse should advise its financial executives to consider strategic alternatives for the company and correspond with Jos. A. Bank by November 11. If that does not occur, the hedge fund said it would exercise its rights as a shareholder to hold the board accountable.
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