In a surprising turn of events, Men's Wearhouse Inc.(NYSE: MW) offered to buy Jos. A. Bank Clothiers Inc. (Nasdaq: JOSB) for $1.5 billion only weeks after rejecting an acquisition offer from its smaller rival. Men's Wearhouse said in a statement today, Nov. 26, that it evaluated a number of alternatives after Jos. A. Bank made its unsolicited offer in October and concluded that an acquisition of Jos. A. Bank made the most sense.
Men's Wearhouse is offering $55 a share in cash for Jos. A. Bank, an 8.7 percent premium over the company's Monday close and a 32 percent premium over its price on October 8, 2013, the day it bid for Men's Wearhouse.
The deal, which would create a company with about 1,700 stores, would add to earnings in the first year after closing, with as much as $150 million in annual savings in purchasing, customer service and marketing over three years, according to Men's Wearhouse.
"After a thorough review, our board concluded that an acquisition of Jos. A. Bank by Men's Wearhouse has strategic logic and the potential to deliver substantial benefits to our respective shareholders, employees and customers," said Bill Sechrest, lead director of Men's Wearhouse, in a statement.
The retaliatory offer from Men's Wearhouse follows advice from its largest shareholder, hedge fund Eminence Capital LLC, which owns about 9.8 percent of Men's Wearhouse's shares. Eminence said a few weeks ago it wanted the company to accept the Jos. A. Bank offer.
Jos. A. Bank's shares rose 11.6 percent to $56.41 in early trading on Tuesday, topping the offer in a sign investors might be expecting a higher bid. Men's Wearhouse shares rose 6 percent.
For more see:
This Wall Street Journal article
This Men's Wearhouse press release
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
Men's Wearhouse Rejects Jos. A. Bank Take-Over...Again
Jos. A. Bank May Consider Raising Bid for Men's Wearhouse