Jos. A. Bank: Men’s Wearhouse offer ‘undervalues’ company

Hampstead, Md. – The correspondence between Jos. A. Bank and The Men’s Wearhouse continues, and it’s not all love letters. In response to a letter sent Jan. 30 from the Men’s Wearhouse board urging Jos. A. Bank to reconsider its recent all-cash offer to acquire Jos. A. Bank for $57.50 per share, or about $1.6 billion, Jos. A. Bank — which rejected that offer on Jan. 20 — does not sound anxious to revisit it in the most recent letter it sent to Men’s Wearhouse president and CEO Doug Ewert.

In the letter, dated Feb. 2, the directors of Jos. A. Bank state they think Men’s Wearhouse’s offer continues to undervalue the company and is not in the best interest of stockholders, so they see no reason to commence negotiations. This last point is key, as Men’s Wearhouse indicated in its Jan. 30 letter that it would consider raising the $1.6 billion offer if Jos. A. Bank can demonstrate or Men’s Wearhouse can discover additional value through discussions or limited due diligence.

Jos. A. Bank also raises specific concerns, such as an antitrust risk Men’s Wearhouse said might exist when Jos. A. Bank proposed buying Men’s Wearhouse in November 2013, a second request from the FTC to review the antitrust implications of the Men’s Wearhouse offer, and what it says are misleading statements about the value of combining the two companies and potential conflicts on the Jos. A. Bank board.

Furthermore, the letter says there are questions about whether the real reason Men’s Wearhouse is pursuing an acquisition of Jos. A. Bank is to avoid a proxy fight with Eminence Capital, its largest shareholder.

“We continue to take our fiduciary duties to our stockholders very seriously,” the letter concludes. “As we have stated consistently, our Board is engaged in a careful and thorough process to determine the best strategic alternative to maximize value for all of our stockholders. Given the fact that the Men's Wearhouse's tender offer does not expire until March 28, 2014, and given the uncertain delay involved in responding to the second request from the FTC, our Board's thoughtful process is causing Men's Wearhouse no delay whatsoever. We will not compromise on devoting the necessary time and effort to exercising our best business judgment on behalf of the Jos. A. Bank stockholders.”

Men’s Wearhouse has not yet replied to the letter. In yet another twist, Bloomberg reports that Jos. A. Bank has held preliminary talks to acquire outdoor clothing retailer Eddie Bauer. Eddie Bauer, which has more than $1 billion in annual sales, was purchased by current owner Golden Gate Capital in 2009.

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