Men's Wearhouse Hostile Takeover of Jos. A. Bank Prompts 2nd Bid

Image: Men's Wearhouse Hostile Takeover of Jos. A. Bank Prompts 2nd Bid

Tuesday, 07 Jan 2014 12:17 PM

By Clyde Hughes

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Men's Wearhouse is attempting a hostile takeover of rival Jos. A. Bank Clothiers under pressure from activist shareholders, but doubt remained among investors Monday that the bid would close the deal.

Jos. A. Bank shares traded below the offer price of $57.50 Monday, illustrating investors' doubts that Men's Wearhouse will be able to pull off the takeover, Reuters reported. Men's Wearhouse's $1.61 billion bid for Jos. A. Bank was its second offer in six weeks.

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The bid, which was a 6 percent premium to Jos. A. Bank's closing price on Friday, could push the two companies closer to a possible merger, analysts told Reuters, which could make them a retail powerhouse for selling suits and renting tuxedos from 1,700 stores around North America.

Jos. A. Bank's headquarters are located in Hampstead, Md., while Men's Wearhouse is based in Houston.

"There are investors that want to see this deal get done and will hold management to the fire one way or another; that's the bottom line," Steven C. Isberg, associate professor of finance at the University of Baltimore's Merrick School of Business told The Baltimore Sun. "What this is going to come down to is which management team is going to be left standing at the end of the deal."

Jos. A. Bank began the merger talk this summer when it made an unsolicited $2.3 billion offer for its larger rival. Some analysts have suggested that Jos. A. Bank could come back with a hostile bid for Men's Wearhouse again.

"It would not be inconceivable for Jos. A. Bank to do the same thing and have dueling bids," Isberg said.

The Baltimore Sun reported that the Jos. A. Bank board will make a recommendation to its stockholders on Jan. 17, but for now instructed stockholders "to take no action on the tender offer."

Jos. A. Bank's board of directors rejected Men's Wearhouse's previous offer in late December, saying it undervalued the company.

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

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