The Hampstead, Md.-based retailer, which rebuffed an unsolicited $1.6 billion offer from Men's last month, said it would pay $564 million in cash and issue about 4.7 million new shares for Bauer, which is currently owned by Golden Gate Capital. Post-deal Everest Topco LLC, a Golden Gate portfolio company, would own about 16.6% of the combination and have the right to designate two directors to the company's board.
The deal is the latest chapter in a now nearly year-long consolidation battle. Jos. A. Bank last year offered $2.3 billion for Men's Wearhouse but walked away after the bid failed to spark negotiations. Men's Wearhouse returned later in the year with an offer Jos. A. Bank has called "inadequate and opportunistic."
Along with the Bauer purchase, Jos. A. Bank said that it would commence a $300 million tender offer to buy back 4.6 million shares at $65 apiece, a premium of 18.4% to the company's Thursday close. The tender represents about 16.4% of the company's shares outstanding.
The company, which estimates it can extract about $25 million in annual synergies from Bauer, in a statement said it believes the combination with Bauer is in the best interest of shareholders.
"The addition of Eddie Bauer provides us with clear avenues for strong growth and expansion for both of our businesses now and in the years ahead, in terms of product offering, store count, global distribution and direct sales," said Jos. A. Bank CEO Neal Black. "In short, we believe a diversified portfolio in specialty retail is a winning formula for investors and we are eager to start our work together."