Men's Wearhouse

Men's Wearhouse Turns Tables On Jos. A. Bank, Pursued Becomes Pursuer

After spurning its founder and onetime spokesperson as well as rejecting a failed takeover bid from smaller rival Jos. A. Bank Clothiers Inc (NASDAQ:JOSB), The Men’s Wearhouse, Inc. (NYSE:MW) now finds itself the pursuer rather than the pursued.

Men's Wearhouse

Men’s Wearhouse raises the stakes

The Men’s Wearhouse, Inc. (NYSE:MW) announced today a hostile $1.61 billion, $57.50 per share takeover of Jos. A. Bank Clothiers Inc (NASDAQ:JOSB), raising the ante on its previous bid of $55 per share bid and a six percent premium over its Friday stock close, Reuters is reporting. This comes on the heels of Jos. A Bank mounting a failed $2.3 billion bid for its larger competitor last year.

Pressure had been building on the two competitors to merge, in particular from The Men’s Wearhouse, Inc. (NYSE:MW) largest shareholder, New York-based hedge fund Eminence Capital, LLC, which owns just under 10% of the stock. Eminence had sought a merger between the two suit retailers and unveiled its goal in a presentation (http://dressmwforsuccess.com/investor_presentation_nov2013.pdf) on November 20, 2013.

Overlap of shareholders makes takeover more likely

There is significant redundancy in shareholders between Jos. A. Bank and Men’s Wearhouse, making a takeover a more likely situation.  Reuters is reporting that two of the top five Jos. A. Banks shareholders are among the top shareholders in Men’s Wearhouse.  However, Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) may be playing hard to get as they announced Friday they lowered the “poison pill” defense from 20% of stock ownership to 10%.  A poison pill makes a takeover more difficult by not allowing any one organization to control more than a certain percentage of the stock.  It is unclear if the hedge funds and investors who advocate the takeover could combine with Men’s Wearhouse to control over 50% of the stock.  Some poison pill defenses consider firms with similar takeover motivations to be categorized as one entity from the standpoint of stock ownership.

Fremont, California-based Men’s Wearhouse was founded over 40 years ago by George Zimmer, whose distinctive voice popularized the advertising slogan “You’re going to like the way you look… I guarantee it.”  The chain of middle market men’s suit stores now numbers 1,700 units, mostly in shopping malls, while Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) has 600 stores.  It is unclear if Jos. A. Bank is guaranteed to like the outcome of the merger, but investors in the firm are benefiting from the rising stock price.

LEAVE A COMMENT


Saved Articles
X
TextTExtLInkTextTExtLInk

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted for being a sophisticated and loyal reader.

Welcome in the new year by signing up up for ValueWalkPremium today and get our exclusive content for 40% off. This is our second biggest discount ever!!

Use coupon code VIP20 or click on the button below

Limited time offer only ENDS 1/31/2019 or after next 30 23 subscribers take advantage whichever comes first – please do not share this discount with others

 

0