Men's Wearhouse will review merger offer, investor says

NEW YORK Tue Nov 12, 2013 2:06pm EST

The Men's Wearhouse sign is seen outside its store in Westminster, Colorado September 11, 2013. REUTERS/Rick Wilking

The Men's Wearhouse sign is seen outside its store in Westminster, Colorado September 11, 2013.

Credit: Reuters/Rick Wilking

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NEW YORK (Reuters) - Men's Wearhouse Inc (MW.N) said it would review a previously rejected merger with Jos. A. Bank Clothiers Inc JOSB.O and a return of capital to shareholders, major investor Eminence Capital LLC said on Tuesday.

The New York-based hedge fund, which is Men's Wearhouse largest single shareholder with almost 10 percent of stock, urged the company to quickly engage with smaller rival Jos. A. Bank over a merger offer Men's Wearhouse turned down in October.

Eminence CEO Ricky Sandler wrote in a letter to the retailer's chief executive officer, Doug Ewert, that he was encouraged by comments in a telephone call on Monday that the company would review all strategic options, including the merger and a "significant" return of capital to shareholders.

"We also fully expect you and the board, given the explicit commitment to explore all options, to actively engage with Jos. A. Bank before their deadline of November 14, 2013," Sandler said.

Men's Wearhouse shares rose as much as 4.5 percent to more than $48 per share after the letter was released. They are currently trading around $47.26.

In October, Jos. A. Bank offered to buy Men's Wearhouse for about $2.3 billion to create a men's apparel heavyweight with more than 1,700 stores - a proposal that Men's Wearhouse swiftly rejected.

Eminence disclosed in a filing on November 7 that it holds 4.7 million shares in Men's Wearhouse. The hedge fund previously said reasons for rejecting the Jos. A Bank takeover offer were "reckless and misinformed," though it agreed with Men's Wearhouse that the $2.3 billion bid was too low.

Jos. A. Bank said last month it may consider raising its $48 per share offer if it was allowed access to its larger rival's books for due diligence. If it wasn't allowed access by November 14, Jos. A. Bank said it would drop its bid.

A representative for Men's Wearhouse was not immediately available for comment.

Jos. A. Bank is being advised by Goldman Sachs and Financo. Its legal advisers are Skadden, Arps, Slate, Meagher & Flom and Guilfoil Petzall & Shoemake.

Men's Wearhouse is being advised by Bank of America Merrill Lynch, JPMorgan Chase and law firm Willkie Farr & Gallagher.

(Reporting by Nadia Damouni; Editing by Lisa Von Ahn and Krista Hughes)

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