Men's Wearhouse Launches $1.6 Bln Hostile Offer For Jos. A. Bank

(RTTNews) - Men's Wearhouse, Inc. (MW) on Monday launched an hostile sweetened offer of $57.50 per share to acquire smaller peer Jos. A. Bank Clothiers, Inc. (JOSB) in an all-cash deal valued at about $1.6 billion. Men's Wearhouse commenced a cash tender to acquire Jos A. Bank, and also said it intends to nominate two candidates to its board of directors.

"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. 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 President and CEO Doug Ewert said in a statement.

The move comes just over a month after Jos. A. Bank rejected Men's Wearhouse's initial $55.00 per share offer, and 45 days after Jos. A. Bank withdrew its acquisition offer for Men's Wearhouse.

Meanwhile, Jos. A. Bank's board of directors also adopted a 'poison pill' in the form of a limited duration shareholder rights plan, declaring a dividend of one right on each share of the company's common stock outstanding on October 21.

It then reduced its shareholder rights plan triggering ownership threshold to 10 percent of outstanding common shares from the initial 20 percent amid hostile actions by Men's Wearhouse that were not seen as being in shareholder's best interests.

The current offer represents only a 5.7 percent premium to Jos. A. Bank's closing share price of $54.41 on Friday, but a 38 percent premium over its closing share price of $41.66 on October 8, the day prior to Jos. A. Bank's proposal to acquire Men's Wearhouse.

The tender offer for Jos. A. Bank's shares are scheduled to expire at 5:00 p.m., New York City time on Friday, March 28, 2014, unless the offer is extended.

Houston, Texas-based Men's Wearhouse said earlier that it intends to fund the deal by a combination of cash on balance sheet and debt financing. It added that the offer does not require any costly third-party equity investment and is not conditioned on financing.

The offer is primarily subject to the tendering of a majority of Jos. A. Bank shares outstanding on a fully diluted basis to the offer. It is also subject to Jos. A. Bank's board of directors redeeming or invalidating its "poison pill" shareholder rights plan.

The flurry of acquisition bids between Men's Wearhouse and Jos. A. Bank began about three months back.

Hampstead, Maryland-based Jos. A. Bank had initially on October 9 offered to acquire Men's Wearhouse for $48 per share in cash, which Men's Wearhouse immediately rejected, stating it significantly undervalues the company and its strong prospects for continued growth and value creation.

Jos. A. Bank withdrew its $2.3 billion all-cash offer for Men's Wearhouse in mid-November, saying the Men's Wearhouse board failed to engage in good faith negotiations by a November 14 deadline.

Men's Wearhouse then in late November made its initial counter offer to acquire Jos. A. Bank in an all-cash deal valued at about $1.2 billion, just ten days after Jos. A. Bank withdrew its offer for Men's Wearhouse.

Additionally, Men's Wearhouse said it will deliver notice to Jos. A. Bank of its intention to nominate two independent director candidates, John Bowlin and Arthur Reiner, for election to Jos. A. Bank's Board of Directors at its 2014 Annual Meeting.

"The highly-qualified nominees proposed by Men's Wearhouse have proven track records serving on public company boards, and we believe they will act in the best interest of Jos. A. Bank's shareholders by carefully evaluating the compelling and value creating opportunity represented by the Men's Wearhouse offer. We urge Jos. A. Bank shareholders to tender into our offer in order to send a strong message that Jos. A. Bank should engage in good-faith negotiations immediately so we can complete this value creating transaction," Ewert added.

MW closed Friday's regular trading session at $50.59, up $0.26 on a volume of 0.28 million shares, and JOSB closed at $54.41, down $0.21 on a volume of 0.38 million shares.