Eminence Capital is trying to force The Men's Wearhouse, Inc. (MW) to enter into negotiations with Jos. A. Bank for a possible merger at a higher price than the original offer.
Eminence Capital has revealed in a regulatory that it's going activist on The Men's Wearhouse, Inc. (MW). The retail chain's shares gained 7% during the regular trading day on Thursday, only to have virtually all of those gains erased in after-hours trading.
Men's Wearhouse rejected Jos. A. Bank's offer
The issue raised by Eminence Capital in its regulatory filing goes back to the offer Men's Wearhouse received from Jos. A. Bank Clothiers Inc (JOSB). Men's Wearhouse rejected the offer last month, saying that Jos. A. Bank was undervaluing Men's Wearhouse.
According to Eminence Capital's filing, the firm bought shares of The Men's Wearhouse, Inc. (MW) because it believed they were undervalued. Jos. A. Bank Clothiers Inc (JOSB)'s offer was worth $48 per share in cash, a 42.4% premium over the previous day's closing price. Men's Wearhouse said the offer didn't take into account its growth strategy and upside potential. It also said Jos. A. Bank's proposal was opportunistic and subject to a number of contingencies and risks which were unacceptable.
On the same day The Men's Wearhouse, Inc. (MW) rejected the offer from Jos. A. Bank, the company also said it adopted a shareholder rights plan with a limited duration.
Eminence Capital writes to Men's Wearhouse
Today, Eminence Capital sent a letter to the board of Men's Wearhouse, saying that the firm was disappointed in the retail chain's response to Jos. A. Bank Clothiers Inc (JOSB). The firm said it agrees that the offer undervalued Men's Wearhouse, but it believes that the board's other reasons for rejecting the offer were not valid.
According to the filing, the firm believes it is the board's fiduciary responsibility to tell their financial advisors to evaluate every strategic alternative that's available and also begin negotiations with Jos. A. Bank about a possible merger. The letter also stated that Eminence Capital would "fully exercise" its rights as a shareholder to "hold the Board accountable" if it doesn't take these requested actions by the close of business on Nov. 11.
Eminence Capital said it is still in discussions with The Men's Wearhouse, Inc. (MW)'s management, its board, other shareholders, Jos. A. Bank and "other interested parties" about the offer.