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