Stifel analysts run the numbers to see how Men's Wearhouse investors would benefit if its bid for Jos. A. Bank was accepted.
The Men’s Wearhouse, Inc. (MW - Get Report) turned the tables on Jos. A. Bank Clothiers Inc (JOSB - Get Report) on Tuesday by offering to acquire the company. Analysts at Stifel say the likelihood of the offer being accepted is very high and that there are plenty of benefits for Men’s Wearhouse investors if the deal should go through. However, they have kept their Hold rating on the company.
How Men’s Wearhouse shareholders benefit
The proposal from The Men’s Wearhouse, Inc. (MW - Get Report) is worth $55 per share for Jos. A. Bank Clothiers Inc (JOSB - Get Report). This would be a $1.2 billion enterprise value and represents 9.1 times EV / EBITDA and a premium to Jos. A. Bank’s bid for Men’s Wearhouse, which was about 8.3 times. The company said it would finance the transaction through cash on hand and debt financing.
Stifel analysts Richard E. Jaffe and his team say if the acquisition happens, shareholders of The Men’s Wearhouse, Inc. (MW - Get Report) would benefit from about $100 million to $150 million in run-rate annual synergies over the next three years. The retail chain would enjoy better purchase efficiencies, better customer service and marketing and streamlined corporate functions. They did a full rundown of estimates for the company’s combined numbers here:Some other benefits they see for The Men’s Wearhouse, Inc. (MW - Get Report) and Jos. A. Bank Clothiers Inc (JOSB - Get Report) include the rollout of Men’s Wearhouse tux rental business, which could increase Jos. A. Bank’s sales by 10 to 15% in their view. And then there’s the fact that The Men’s Wearhouse, Inc. (MW - Get Report) would be taking over what many consider to be its biggest rival and then becoming the biggest “specialty retail channel for men’s clothing” and fourth biggest overall, according to estimates from Men’s Wearhouse. The analysts used the merger of Macy’s and TJ Maxx as an example of the potential benefits both companies would receive.