Men's Wearhouse Launches Hostile Takeover of Jos. A. Bank

Here we go again. The Men's Wearhouse (NYSE: MW) has launched a hostile bid for rival Jos. A. Bank, penning yet another chapter in the ongoing battle to merge the two suit retailers.

Men's Wearhouse said Monday that it has made an all-cash offer of $57.50 for all outstanding shares of Jos. A. Bank Clothiers Inc.(Nasdaq: JOSB), upping its previous offer of $55 per share, bringing the total value to $1.61 billion. That price tag makes Men's Wearhouse's bid 5.7 percent higher than Friday's close and 52 percent above Jos. A. Bank's share price before its buyout offer in October.

"We believe that our $57.50 per share proposal to acquire Jos. A. Bank is compelling and provides substantial value and immediate liquidity to Jos. A. Bank shareholders," Men's Wearhouse president and CEO Doug Ewert said in a statement. "Although we have made clear our strong preference to work collaboratively with Jos. A. Bank to realize the benefits of this transaction, we are committed to this combination and, accordingly, we are taking our offer directly to shareholders."

Men's Wearhouse said its offer would close on March 28, unless extended. The company will also nominate two independent directors for election to Jos. A. Bank's board.

The new Men's Wearhouse offer will test the poison pill defense adopted by Jos. A. Bank just last week. On Friday, Jan. 3, Jos. A. Bank amended its takeover defenses, effectively limiting shareholders to owning no more than 10 percent of its stock, making it tougher for Men's Wearhouse to pursue a bid.

The tug of war between Men's Wearhouse and Jos. A. Bank began in early October when Jos. A. Bank made an unsolicited $2.3 billion offer for Men's Wearhouse. Men's Wearhouse rejected the offer with Jos. A. Bank stating it would consider raising its bid in exchange for limited due diligence, but Men's Wearhouse again declined. Jos. A. Bank never went so far as to run a hostile bid, instead dropping its unsolicited offer after failing to draw enough shareholder support.

Then, in a surprising twist, Men's Wearhouse offered $1.5 billion, or $55 a share, for Jos. A. Bank in late November. Jos. A. Bank rejected that bid a month later, concluding that the offer "significantly undervalued the company." 

Executives at both retailers have touted the benefits of a merger, which would include cost savings, diversifying their product lines and little overlap between their customers. A merger of the chains will create a $3.5 billion retailer with more than 1,700 stores that some analysts said would better compete with department stores.

Shares of both companies were up 5 percent in premarket trading on the news.

For more see:
-This Men's Wearhouse press release
-This Reuters article

Related stories:
Jos A. Bank Rejects Men's Wearhouse Takeover Bid
Men's Wearhouse Turns Tables With Offer to Buy Jos. A. Bank
Jos. A. Bank Withdraws $2.3 Billion Men's Wearhouse Offer
Men's Wearhouse Will Review Jos. A. Bank's Merger Proposal
Activist Investor Urges Men's Wearhouse to Reconsider Jos. A. Bank Takeover

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