Jos. A. Bank ends Men’s Wearhouse bid; Eminence Capital wants meeting
Houston – Jos. A. Bank has officially withdrawn its all-cash bid to purchase Men’s Wearhouse for $48 per share, or about $2.3 billion, after failing to get the retailer to enter into merger talks ahead of a Thursday deadline.
Robert N. Wildrick, chairman of the board of Jos. A. Bank, sent a letter to Men’s Wearhouse CEO Doug Ewert informing him that since Men’s Wearhouse had not engaged in good faith negotiations by a previously stated Nov. 14 deadline, Jos. A. Bank would terminate its proposal.
The letter goes on to say Jos. A. Bank will investigate other strategic alternatives and may be willing to consider a new proposal to purchase Men’s Wearhouse if invited by the Men’s Wearhouse board or circumstances change.
In related news, Eminence Capital, the largest Men’s Wearhouse stockholder with 4.7 million shares of the company (almost 10%), has filed a preliminary solicitation statement with the Securities and Exchange Commission (SEC) in connection with calling a special meeting of MW shareholders to vote on a number of bylaw amendments that, if approved, will permit shareholders to remove directors without cause before the next annual meeting of shareholders.
"We are disappointed that Men’s Wearhouse has so far failed to engage in merger discussions with Jos. A. Bank,” Ricky C. Sandler, CEO of Eminence Capital, said in a press release. “In light of the Board’s actions, we are forced to launch this initiative that will give shareholders the opportunity to effect important corporate governance changes at Men’s Wearhouse. In our view the governance changes implemented last month by the Board in response to the premium proposal made by Jos. A. Bank, including the imposition of a super-majority vote for shareholder amendments to the bylaws and implementation of a poison pill with a 10% threshold, are not in the best interests of shareholders. More fundamentally, these actions reflect a troubling mindset by the board and its advisors regarding shareholders’ rights.”
Sandler went on to say Eminence continues to encourage the Men’s Wearhouse board to consider all strategic options, including a Jos. A. Bank merger. Jos. A. Bank referred to Eminence Capital’s support for consideration of a merger in its letter to Men’s Wearhouse.
Kid Brands enhances supply chain
Kid Brands has entered into an agreement with National Distribution Centers — a warehousing and distribution division of NFI, which is a fully integrated supply chain solutions provider — to address certain third-party logistics for the company’s warehousing and distribution operations.
NFI will provide storage, handling, inventory management, transportation management, shipping, receiving, repackaging, order processing and related support services for Kid Brands and its subsidiaries. Throughout the next several quarters, Kid Brands intends to consolidate its five existing distribution facilities into one centralized location of an aggregate 515,000 sq. ft. operated by NFI on its Chino, Calif., campus. NFI currently provides third-party logistics services to the company’s LaJobi subsidiary. Upon full implementation of the third-party logistics agreement, the company anticipates an increase in overall efficiencies and sustainable long-term benefits to operating margin.
"The consolidation of our five distribution centers across the country into one centralized location is further testament to our commitment to transform the business and streamline our operations,” said Kerry Carr, EVP, COO and CFO. “As we continue to critically assess our operational platform, we remain diligent in seeking out methods to drive sustainable efficiencies and cost savings, as well as improve the overall effectiveness of our supply chain. Our efforts thus far have already yielded tangible results, both operationally and financially, and we intend to continue our relentless pursuit to drive a higher level performance across almost every aspect of the company’s business."
Carr explained that the company’s agreement with NFI as an important step toward achieving improved service, capacity, speed and accuracy at a reduced cost. Carr added that the enhanced relationship with NFI will better position the company to serve the growing e-commerce channel of distribution through drop-shipping fulfillment capabilities for its customers, and provide improved service to its entire customer base, including enhancement of service to the specialty channel.
Kid Brands anticipates that once fully implemented, the new distribution arrangement will generate more than $2 million in savings annually, with initial savings expected to begin in the second half of 2014. The company will pay $1.5 million to NFI in startup costs throughout a nine-month period beginning in the fourth quarter of 2013, offset in part by reduced fixed costs over the initial term of the third-party logistics agreement. The initial term of the agreement will continue through March 1, 2019, with automatic renewals for successive 12-month periods (up to an additional 5 years) until terminated pursuant to the terms of the agreement. The consolidation and transition to operations under the new agreement is currently expected to be completed in the second quarter of 2014.
Kid Brands’ current operating subsidiaries consist of Kids Line, LaJobi, Sassy and CoCaLo. Through these wholly owned subsidiaries, the company designs, manufactures (through third parties) and markets branded infant and juvenile products in a number of complementary categories including infant bedding and related nursery accessories and décor and nursery appliances (Kids Line and CoCaLo); nursery furniture and related products (LaJobi); and developmental toys and feeding, bath and baby care items with features that address the various stages of an infant’s early years, including the Kokopax line of baby gear products (Sassy). In addition to its branded products, the company also markets certain categories of products under various licenses, including Carter’s, Disney, Graco and Serta.
NFI is a fully integrated supply chain solutions provider. NFI owns facilities globally and operates in excess of 20 million sq. ft. of warehouse and distribution space. Its company-owned fleet consists of more than 2,000 tractors and 7,000 trailers, operated by more than 2,500 company drivers and 250 owner-operators. Its business lines include transportation, distribution, warehousing, transportation brokerage, intermodal, real estate and solar services.
XPO expands footprint with Optima acquisition
XPO Logistics, a transportation logistics services provider in North America, has acquired Optima Service Solutions, a leading non-asset provider of last-mile logistics services for major retailers and manufacturers in the United States.
The cash purchase price was $26.6 million, excluding any working capital adjustments, with no assumption of debt. Optima had revenue of $35.7 million and adjusted EBITDA of $3.7 million, respectively, for the 12-month period ended Oct. 31. The acquisition is expected to be immediately accretive to earnings, exclusive of any synergies with the company’s existing freight brokerage business.
Founded in 1997, Optima has generated a 16% compound annual growth rate throughout the past five years. The business uses its contractual network of independent carriers and technicians to facilitate the residential delivery of heavy goods in every U.S. zip code. Optima’s proprietary technology tracks the last-mile process through order entry, scheduling and service completion.
“Optima is a fast-growing, highly scalable leader in its space, and expands the capabilities of our last-mile division, 3PD,” said Bradley Jacobs, chairman and CEO of XPO Logistics. “It enhances our ability to provide a seamless in-home delivery experience for end customers, particularly with large appliances and electronics. In addition, Optima benefits from the same powerful tailwind as 3PD: the growing inclination of retailers and manufacturers to outsource the last-mile logistics of heavy goods. We plan to leverage these synergies, and integrate Optima’s proprietary software with our last-mile technology. This will create a single, powerful customer service platform that doesn’t exist in the last-mile sector today.”
XPO is the fourth largest freight brokerage firm, the largest provider of heavy goods, last-mile logistics, and a top five expediter, with growing positions in global freight forwarding, intermodal and less-than-truckload brokerage. The company facilitates more than 18,500 deliveries a day throughout the U.S., Mexico and Canada.