Jos. A. Bank, Men's Wearhouse Play Hard To Get But A Deal Needs To Happen

Dec 23 2013, 1:41pm CST | by

Jos. A. Bank, Men's Wearhouse Play Hard To Get But A Deal Needs To Happen
Photo Credit: Forbes Business

How many times will Jos. A. Bank and Men's Wearhouse say “no” to one another before one of them says “yes” to a merger?

The men’s retailers have now each rejected takeover offers from the other over the last 10 weeks.

The latest rebuff came today when Jos. A. Bank rejected a $1.5 billion acquisition deal from its larger competitor, Men’s Wearhouse.

Robert N. Wildrick, chairman of Jos. A. Bank, said, “Our Board undertook a thorough review and determined that the per share consideration in the proposal made to us by Men’s Wearhouse was simply not in the best interest of our shareholders.”

Men’s Wearhouse said it was caught off guard by the rejection.

“Given Jos. A. Bank’s repeated expressions of interest in engaging in good faith discussions about a possible combination with Men’s Wearhouse, we are surprised that Jos. A. Bank has rejected our proposal,” the company said in a statement today.

The November 26 per share offer from Men’s Wearhouse was $55, a nearly 9% premium over the price of Jos. shares at the time. In the roughly three weeks since the offer shares of Jos. were up 13%, but fell today after it rejected of the deal.

The rejection by Jos. is just the latest in the M&A courting games played by both retailers.

Back in early October it was Men’s Wearhouse rejecting a takeover bid from its smaller rival; in that deal Jos. A Bank made a$2.3 billion bid for Houston-based Men’s Wearhouse but failed.

So what’s with all the back and forth?

The two men’s retailers seem to need each other to grow their customer base but neither appears to be willing to give in to the other.

Men’s Wearhouse could benefit from a deal with Jos. A. Bank which claims its customers are bigger spenders with higher annual incomes. Men’s Wearhouse tends to cater to middle-income, younger males. Merging the two could allow it to serve a broader demographic.

Jos. A. Bank is much smaller with 602 stores compared to Men’s Wearhouse’s 1,143. The latter reported $2.5 billion in sales in 2012 (up 4%) compared to $1 billion for Jos which was up 7%. Net income was $132 million and $80 million respectively.

Both companies seem to want to make a deal happen neither can agree on which one should run a combined entity. Men’s Wearhouse would like to see its executive team in charge, and Jos. its own.

What happens next? It looks like Men’s Wearhouse is looking to strengthen its deal in hopes of winning the battle.

“While it is our strong preference to work collaboratively with Jos. A. Bank to realize the benefits of this transaction, we are continuing to carefully consider all of our options to make this combination a reality, including nominating director candidates at Jos. A. Bank’s next annual meeting of shareholders,” the company said in a statement today.

Source: Forbes Business

 
 
 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Windows 10 Ads Excessively Show Babies
Windows 10 Ads Excessively Show Babies
Microsoft released a series of Windows 10 commercials with lots of babies.
 
 
Barclays Fires CEO Antony Jenkins
Barclays Fires CEO Antony Jenkins
The head of Barclays has sacked Antony Jenkins. And the reasons are obvious.
 
 
Microsoft Lays Off 7,800 Employees
Microsoft Lays Off 7,800 Employees
Microsoft just announced the rumored major lay off.
 
 
Starbucks Raises Prices
Starbucks Raises Prices
The coffee company raises prices for the second time in two years.