Feb. 14 - Jos. A. Bank's purchase of Eddie Bauer may be aimed at fending off suitor, Men's Wearhouse. Fred Katayama reports.
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UPSOUND FROM COMMERCIAL (ENGLISH):
"You're gonna like the way you look."
But Men's Wearhouse may not like the way this deal looks. Archrival discount clothier Jos. A. Bank is buying outdoor apparel retailer Eddie Bauer, and that move could be aimed at repelling its suitor, Men's Wearhouse. Bank is paying $825 million in cash and stock for Bauer and buying back up to $300 million of its own stock at an 18 percent premium.
Bank said it considered a Bauer buy the best way to enrich its shareholders after also considering a purchase of, or sale of, itself to Men's Wearhouse. Since last fall, Bank and Men's have taken the gloves off in bids to buy each other out.
Stifel analyst Richard Jaffe said in a recent note, "We believe an Eddie Bauer acquisition by Jos. A. Bank would significantly diminish the appeal of Jos. A. Bank as an acquisition by Men's Wearhouse, which is probably an objective, whether it is authentic interest or merely a ploy."
Investors had earlier bid up both stocks, indicating they want to see a marriage of the archrivals, however bitter they may be. And so, the Bauer news pushed shareholders to sell off shares of both Banks and Men's Wearhouse at the market open.
But Bank has left its options open, reserving the right to drop its bid for Bauer if it got a better offer.
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