The Men's Wearhouse board has rejected an unsolicited $2.4 billion bid from smaller rival Jos. A. Bank Clothiers, because it didn't like the way it looked.
"Men's Wearhouse believes the Jos. A. Bank unsolicited and inadequate proposal is a highly opportunistic attempt to exploit a temporary dislocation in the stock price of Men's Wearhouse in order to deprive Men's Wearhouse's shareholders of the intrinsic value of their investment," Bill Sechrest, the board's lead director, said in a statement before the stock market opened Wednesday, Businessweek reported
. "Men's Wearhouse's recent second-quarter performance was impacted by difficult market conditions, which many other retailers faced during the quarter, including Jos. A. Bank."
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This is the second time this year that the men's apparel retailer said no to the thought of selling.
In June, the board dismissed its founder and chief spokesman George Zimmer
, who had been seeking a sale to a private firm. Zimmer, the largest individual shareholder with a 3.7 percent stake, responded to his ouster by saying that board was ignoring his "growing concerns" about the company's direction.
A merger with Jos. A. Bank would create a powerhouse partnership and help the struggling Men's Wearhouse, Brian Sozzi, chief equities strategy at Belus Capital, told Business Insider
"Men's Wearhouse would be absolutely silly not to take the money and run," Sozzi said. "The company is not a growth retailer."
The company's stock (MW) surged nearly 28 percent on the reported $48-a-share takeout bid, which represented a 36 percent premium to Tuesday's closing price.
Jos. A. Bank said the offer was made Sept. 17, and intended to pay for it through cash on hand, debt financing, and a $250 million equity investment from private equity firm Golden Gate Capital.
Jos. A. Bank (JOSB) traded as high as $45.50 per share on Wednesday, up from its $41.66 closing price on Monday.
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