That's because the Houston-based clothing retailer took the unusual step of releasing a statement on Tuesday claiming that the reason it fired co-founder George Zimmer as chairman was because he wanted to sell the company to a group of private equity investors.
Men's Wearhouse's board claimed such a sale would be too risky, considering the debt that the company would be leveraged with to finance a deal.
"Mr. Zimmer reversed his long-standing position against taking the company private by arguing for a sale of the Men's Wearhouse to an investment group," the board said in the statement, and then went on to laud chief executive Doug Ewert's strategic plan and the company's "experienced management team.""The board strongly believes that such a transaction would be highly risky for our employees and would threaten our company culture that is so important to all of us," the statement added. In a statement issued late Wednesday, Zimmer said he merely wanted the board to explore the full range of strategic alternatives, including a take-private transaction. But he said that at this stage he was unsure if a leveraged buyout was in the best interest of the company. Zimmer said he felt it was the board's duty to consider the full range of possibilities toward creating more value for shareholders. He criticized the board for rejecting the possibility of a sale without even consulting its financial advisers. Opposing a sale would give the board leverage if Zimmer were able to find private equity partners willing to make an offer for the company, and leverage may be needed as the company is vulnerable to a buyout. Despite the "unprecedented" way that the board chose to unveil its differences with its chairman, Belus Capital Advisors CEO and chief equities strategist Brian Sozzi believes there may still be a rapprochement. Yet with the "for sale" sign waved in front of eager investors, it could be difficult for the board, which has already hired an adviser to shop one of the retailer's units, to put the cat back in the shopping bag.