Jos. A. Bank acquires Eddie Bauer

In a new twist in Jos. A. Bank's (NASDAQ: JOSB) quest to stay independent, the menswear retailer announced the acquisition of outdoor clothing company Eddie Bauer.

Jos. A. Bank said it would purchase the retailer for approximately $825 million in a combination of cash and shares of outstanding stock: $564 million in cash and 4.7 million shares at $65 per share to an affiliate of Golden Gate Capital, Everest Topco. Everest Topco will then control 16.6 percent of the new company and can appoint members to its board of directors.  

Jos. A. Bank said the combination creates new opportunities for growth and extends the menswear retailer into womenswear and footwear for the first time. While the two brands will be run independently, the combined company is expected to realize approximately $25 million of identified process and infrastructure savings expected to be realized in 2015.

Jos. A. Bank has been engaged in an intensive process over the last two years to identify and review high potential acquisition candidates that would enable the company to leverage its core competencies and deliver immediate and long-term value to its shareholders. Eddie Bauer was one of the first acquisition candidates considered by Jos. A. Bank.  

The company said it contacted Golden Gate on several occasions to discuss a possible acquisition of Eddie Bauer, first in early 2012, a number of times thereafter and again several months before making its first offer for Men's Wearhouse (NYSE: MW) in September 2013. For the year ended December 31, 2013, Eddie Bauer has estimated its revenue to be between $885 million and $895 million, according to Jos. A. Bank. In 2014, the combined company is expected to generate in excess of $2.1 billion in revenue.

"We have long admired the Eddie Bauer brand and its widespread appeal among those with active lifestyles and excitement about the outdoors, a large and growing customer base that overlaps significantly with ours. Based on the success of Eddie Bauer's turnaround and the outstanding opportunities a combination of our companies provides, we believe this transaction ideally positions Jos. A. Bank for the future," said Robert Wildrick, chairman of Jos. A. Bank.

Neal Black will remain CEO of Jos. A. Bank and Mike Egeck will continue to head up Eddie Bauer.

The Eddie Bauer acquisition is the latest in Jos. A. Bank's year-long battle with Men's Wearhouse, as the two retailers took turns bidding to acquire the other. Most recently on Feb. 2, Jos. A. Bank turned down an offer from Men's Wearhouse, saying it undervalued the company and it would instead focus on acquisitions of its own, quite possibly Eddie Bauer.

Jos. A. Bank's right to terminate its agreement to acquire Eddie Bauer in order to accept a superior proposal is subject to payment of a fee of less than 3% of Jos. A. Bank's equity value based on Men's Wearhouse's current tender offer price. The closing of the Eddie Bauer acquisition is subject to the satisfaction of customary closing conditions, including the expiration of the Hart-Scott-Rodino waiting period. Closing of the Eddie Bauer acquisition is a condition to completion of the tender offer.

Under the terms of the agreement, Jos. A. Bank will have the right to terminate its agreement to acquire Eddie Bauer in the event an unsolicited offer is made to acquire Jos. A. Bank that the company's board determines would reasonably be expected to create greater value for Jos. A. Bank's shareholders than the Eddie Bauer transaction and issuer tender offer.

For more:
-See this Jos. A. Bank press release

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