Men's Wearhouse Inc MW.N said it was open to sweetening its spurned buyout offer for Jos. A. Bank Clothiers Inc JOSB.O - under certain conditions - and called on independent directors of the smaller men's clothing chain to reconsider its bid.
Jos. A. Bank shares were up marginally in early trading Thursday after rising as much as 3 percent before the bell.
In a letter to Jos. A. Bank's independent directors, Men's Wearhouse said it could raise offer of $1.61 billion, or $57.50 per share, "if additional value was discovered through discussions or limited due diligence.
A Jos. A. Bank spokesman declined to comment.
Men's Wearhouse took a revised offer to Jos. A. Bank shareholders in early January after its rival rejected an offer of $55 per share in December.
Jos. A. Bank has urged shareholders to reject the hostile bid, calling it inadequate and opportunistic.
Jos. A Bank shares were trading at $55.26 on Thursday.
Men's Wearhouse, struggling to compete with department stores that offer cheaper men's clothes, has however won support for its bid from Eminence Capital LLC, which has significant stakes in both companies.
Eminence has said it would seek a court ruling to prevent Jos. A. Bank from refusing to discuss the Men's Wearhouse offer.
The Men's Wearhouse bid faces a further hurdle after federal antitrust regulators this week posed extra questions about the bid under a so-called "second request."
The increased scrutiny from the U.S. Federal Trade Commission was expected as Men's Wearhouse itself raised the specter of antitrust problems when Jos. A. Bank had offered to acquire the company in October.
Men's Wearhouse acknowledged the antitrust risk on Thursday and said it would cooperate with the FTC to obtain approval for the transaction as soon as possible.
The company also called on the directors of Jos. A. Bank to form a special committee to reconsider its bid.
Men's Wearhouse shares were little changed at $45.93 in early trading on Thursday.
(Reporting by Devika Krishna Kumar and Maria Ajit Thomas in Bangalore; Editing by Saumyadeb Chakrabarty and Ted Kerr)