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Breakingviews: Financially fashionable M&A

Tuesday, November 26, 2013 - 03:19

Nov. 26 - Men's Wearhouse has proposed to buy Jos. A. Bank after fending off a hostile bid from its smaller rival. Breakingviews editors talk about why the deal is practically tailor-made.

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So it's all happening in the world of seats emanate we had just a bank trying to take it was much larger rival. A few weeks ago Men's -- They haven't men's warehouse comeback. With an -- resign Jeff you know locals took her to be addressed to address this topic today. What is scheduled Men's -- waste a listing was evidence problems and deal and I don't -- when there. It's it's a contestant but did not say it is well it's actually have a smaller. I'll be trying to by the -- yet. It didn't seem to make a lot of sense. The sport programs there are a lot of money yet it was -- get third party financing beginning and a seller financing lined up. They didn't put out a senator's numbers it was unclear what they were strategic thinking where they're gonna cut the costs it was on this list as well console to console is on top of that. Men's warehouse the bigger companies had. Go away yet and they've managed to do you have a few weeks ago they kind of call off the deal. But of course putting these two companies together makes a lot of sense I mean then essentially doing the same -- yeah it's it's one of those industries where scale probably have an impact. At least it has Men's -- Proposed it. Now with huge synergies. 250 million dollars a year. Mostly cutting on purchases going marketing costs those cards and if you mean that the president bodies shelves that once -- of capitalize -- is always the entire -- of the deal right exactly on top of the fact that just a bank. Also has 300 million dollars cash for a term us senate to all right so much you put all that and you know put all that there. It almost covers the entire cost of the deal. The -- moving much less leverage from the way it's being structured now. Under three times at the top. As opposed to closer to five times you know the way it. It was -- before because you have -- smaller company. You're buying the beer company. So far Clinton gave you one other wrinkle in the deaths is that in the middle of -- just they're bankers trying to buy men's warehouse. If the chairman talking to Wall Street Journal -- and essentially saying well if somebody were -- me this kind of premium I would I would do yet assortment. The he's basically now been thrown back into his core is gonna after it. I guess here's -- considers. I don't it's not clear what what objections are made and and and -- -- some might lemons last in this now when we were getting -- excellent this may be one of the very rare events they. Pacman defense yet -- he turns around to gobble up its rivals trying to trying to eat it up. Seems like there was a timing issue here on the Men's -- been going through some mob or troubles. Their founder I guess that put forward an idea -- -- to sell the company support kicked him off. You've been with the company there's no one here yet it's cumulative area yet. So known through for the -- and yes it maybe the company looked a little vulnerable because they you know they had -- -- they aren't. Kicked up founder maybe that's why just the banking and house. At the same time it may have been this was their plan all along -- conspiracy here's an event. We'll just want the spit then Bryant and you know clearly makes more sense -- -- also with significant. Kind of get something going which I think footwork capacity loving it just about shells reaction to post is that that pricing isn't saying anything is a great deal stick so thanks that -- and will be back with mold breaking views tomorrow.

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Breakingviews: Financially fashionable M&A

Tuesday, November 26, 2013 - 03:19