* Raises offer for Jos. A. Bank to $57.50/share from
* Tender offer expires on March 28
* Men's Wearhouse to nominate two directors to Jos. A.
* Men's Wearhouse shares up 3 pct
* Jos. A. Bank shares trading below offer price
By Chris Peters
Jan 6 Men's Wearhouse Inc mounted a
hostile $1.61 billion bid for Jos. A. Bank Clothiers Inc
in an attempt to break the resistance of its smaller
rival and pacify investors hungry for a merger of the suit
Shares of Jos. A. Bank were trading below the offer price of
$57.50 on Monday, indicating doubt among investors that the
offer - the second by Men's Wearhouse in the space of six weeks
- would be enough to seal the deal.
But analysts said the bid, at a 6 percent premium to Jos. A.
Bank's closing price on Friday, was likely to nudge the two
companies closer to the creation of a combined chain selling
suits and renting tuxedos from 1,700 stores in North America.
Men's Wearhouse shares rose nearly 3 percent.
Men's Wearhouse has been under pressure from activist
shareholders to capture a bigger share of a market where growth
prospects are limited and retailers have traditionally offered
big discounts to compete with department stores.
By upping its offer and taking it to every Jos. A. Bank
shareholder, the company is raising the stakes in a protracted
battle between rivals intent on playing the lead role in such a
The offer, higher than its previous bid of $55 per share,
will also test the poison pill defense adopted by Jos. A. Bank
on Friday. The company had lowered the trigger to 10 percent
from 20 percent to make a takeover more difficult.
Men's Wearhouse Chief Executive Doug Ewert said the company
would prefer to work with Jos. A. Bank, but would pursue its
"We are committed to this combination and, accordingly, we
are taking our offer directly to shareholders," Ewert said.
Men's Wearhouse also said it would nominate two independent
directors for election to Jos. A. Bank's board.
Jos. A. Bank said in a statement it would review the latest
offer and make a recommendation to shareholders on or before
"This latest raised bid might get Jos. A. Bank to at least
have a conversation with Men's Wearhouse," said Brian Sozzi, CEO
of Belus Capital Advisors.
'I GUARANTEE IT'
Fremont, California-based Men's Wearhouse was founded 40
years ago by George Zimmer, known to U.S. television audiences
for his advertising catchphrase, "You're going to like the way
you look - I guarantee it."
Zimmer was ousted by the board in June after arguing for a
sale of the company to an investment group.
Jos. A. Bank, a century-old retailer of men's tailored and
casual clothing, triggered the latest shareholder battle with a
$2.3 billion bid for Men's Wearhouse last year that was swiftly
rebuffed by its larger rival.
The retaliatory offer from Men's Wearhouse - a tactic called
the Pac-Man defense after the 1980s video game in which Pac-Man
turns on the ghosts trying to kill him - followed pressure to
merge from its largest shareholder.
New York-based asset management firm Eminence Capital LLC,
which owns 9.8 percent of Men's Wearhouse and in November
revealed a stake of about 5 percent in Jos. A. Bank, said it
supported a merger of the two companies.
"We are encouraged by the increased bid MW (Men's Wearhouse)
made for JOSB (Jos. A. Bank) and by its commitment to consummate
a combination," Eminence CEO Ricky Sandler said in a statement
emailed to Reuters.
There is significant overlap elsewhere between shareholders
of both companies.
Fidelity and Wellington Management, two of Jos. A. Bank's
top five shareholders, are also among the 30 largest
shareholders in Men's Wearhouse, according to Thomson Reuters
Men's Wearhouse said its nominees for the board of Jos. A.
Bank were John Bowlin, a former CEO of Miller Brewing Co, and
Arthur Reiner, a former executive of Macy's Inc. The date
of the annual meeting at which their candidacy will be put
forward has yet to be announced.
Men's Wearhouse said its offer would close on March 28,
Men's Wearhouse operates more than 1,100 stores under the
Men's Wearhouse, Moores and K&G banners. Jos. A. Bank has more
than 600 stores in the United States.
Men's Wearhouse shares, which have risen about 50 percent
since Jos. A. Bank's bid for it in October, were up 2.7 percent
at $51.98 on the New York Stock Exchange.
Jos. A. Bank's Nasdaq-traded stock, which has risen more
than 35 percent since the takeover saga began, was up 4.3
percent at $56.75.