After meeting with executives of both companies, Jaffe said in a research note that the deal, "while speculative, has the real possibility of being completed longer term and that the benefits to the combined entity could prove significant."
Based on a takeout basis, Jaffe estimates that Men's Wearhouse could go for $52 a share, higher than Jos. A. Bank's offer of $48 a share. Jaffe does not cover Jos. A. Bank. He rates Men's Wearhouse at a "buy."
Men's Wearhouse on Wednesday rejected a $2.3 billion cash takeover offer by Jos. A. Bank, saying that the bid "significantly undervalues" the company and "is not in the best interests of Men's Wearhouse or its shareholders." The deal proposed a takeout offer of $48 a share - a premium of approximately 42% to Men's Wearhouse stock's closing price the day before the offer was sent.
Following the rejection, Jos. A. Bank Chairman Robert Wildrick told the Wall Street Journal that he would continue to press his company's bid, but he was also receptive to a buyout of Jos. A. Bank by Men's Wearhouse with the same 42% proposed premium.
Both companies' stocks surged on the news this week. Men's Wearhouse shares are up 30% since Tuesday, the day before the bid was announced. Jos. A. Bank shares are up 16%. Men's Wearhouse shares were gaining an additional 3.3% to $45.95, at last check. Jos. A. Bank rose 6.2% to $48.19.