Men's Wearhouse Turns Hostile With $1.6B Bid

NEW YORK (The Deal) -- Men's Wearhouse (MW) on Monday took its bid for Jos. A. Bank Clothiers (JOSB) directly to its rival's shareholders, submitting a tender offer valuing the Baltimore-based clothing retailer at $1.61 billion.

Fremont, Calif.-based Men's Wearhouse is offering $57.50 per share for Jos. A. Bank, a premium to a $55 per share offer it floated in November and more than 35% above Jos. A. Bank's trading price in early October. Men's Wearhouse also said it intends to nominate two directors to Jos. A. Bank's board for consideration at the company's 2014 annual meeting.

The offer is the latest salvo in a battle between the two companies, sparked early last year by Jos. A. Bank, which offer launched an unsolicited $2.3 billion bid for the larger Men's Wearhouse. The two companies have agreed there is logic to combining the two largest men's formal attire retailers, but haven't been able to see eye-to-eye on valuation or who would be in control of the combination.

Men's Wearhouse said its latest offer values Jos. A. Bank at 9.4 times estimated trailing 12-month Ebitda, and urged Jos. A. Bank to come to the table.

"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," Men's Wearhouse CEO Doug Ewert said in a statement. "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."

Jos. A. Bank offered no immediate response, but the company likely knew the offer was forthcoming. Jos. A. Bank on Jan. 3 strengthened its poison pill defense, saying it was leveling the playing field by setting the pill's threshold at 10% to match a similar plan in place at Men's Wearhouse that had proved effective when Bank was the aggressor.

Men's Wearhouse said it was also planning to nominate one-time Miller Brewing Co. CEO John D. Bowlin and former Macy's Inc. executive Arthur E. Reiner to the Jos. A. Bank board.

"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," Ewert said. "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."

--Written by Lou Whiteman

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