Men's Wearhouse eyes Jos. A. Bank; investors win

Alistair Barr | USA TODAY

The suit wars are heating up on Wall Street.

Men's Wearhouse offered to buy Jos. A. Bank Clothiers Tuesday, turning the tables on an apparel retailing rival that has been trying to take it over.

News of the offer was a win-win for investors, with stock in both companies jumping Tuesday. Jos. A. Bank shares closed up 11.3% to $56.29. Men's Wearhouse shares climbed 7.5% to $50.60.

Men's Wearhouse proposed to acquire Jos. A. Bank for $55 per share in cash, representing an implied enterprise value of approximately $1.2 billion.

The company said its takeover offer is a 32% premium over Jos. A. Bank's closing share price on Oct. 8, 2013, the day before Jos. A. Bank proposed to buy Men's Wearhouse.

"We are the right acquiror for this combination and ... our experienced management team is best positioned to execute the integration of our companies and achieve the synergies that would result," said Bill Sechrest, lead director of the board of Men's Wearhouse.

Jos. A. Bank said it will evaluate the offer and respond in due course.

A combination of the two companies would create the fourth-largest U.S. men's apparel retailer, with more than 1,700 total stores and annual sales of more than $3.5 billion, Men's Wearhouse said.

The company forecast that the combination would create about $100 million to $150 million of annual synergies over three years through more efficient purchasing, customer service and marketing, and streamlining corporate functions. The deal would add to Men's Wearhouse's earnings in the first year following closing, it added.

Men's Wearhouse said it plans to pay for the deal with existing cash from its balance sheet and borrowed money.

Jos. A. Bank withdrew its $2.3 billion offer to buy Men's Wearhouse earlier in November.

Eminence Capital, a hedge fund firm run by Ricky Sandler which oversees $4.5 billion in assets, has been pushing Men's Wearhouse's board of directors to enter merger discussions with Jos. A. Bank.

The firm, which owns 9.8% of Men's Wearhouse shares and a smaller stake in Jos. A. Bank, posted a presentation online that estimated about $2 billion in market value may be created through a combination of the two retailers.

Eminence wanted Men's Wearhouse to be more open to an offer from Jos. A. Bank; however, the hedge fund firm sounded happy with the counterbid on Tuesday.

"We are pleased to see that the Board of Men's Wearhouse agrees with us and recognizes the substantial benefits of merging with Jos. A. Bank," Sandler said in a statement.