Jos. A. Bank Pulls The Plug On Men's Wearhouse Acquisition

By Anna Rose Welch, Editorial & Community Director, Advancing RNA

Despite recent offer termination, company remains open to a future arrangement with Men’s Wearhouse

Plans for Jos. A. Bank to purchase Men’s Wearhouse were terminated Friday when Men’s Wearhouse failed to meet the terms of the arrangement set forth by Jos. A. Bank. In order for the acquisition to occur, Men’s Wearhouse needed to engage in good faith negotiations with Jos. A. Bank by November 14^th. However, no such discussions took place.

Acquisition negotiations have been up for discussion since September 18^th, 2013 when Jos. A. Bank made a confidential and non-binding proposal to acquire all the outstanding shares of Men’s Wearhouse for $48 per share. Had Men’s Warehouse accepted this bid, total equity from Jos. A. Bank would’ve equaled $2.3 billion. In partnership with Golden Gate Capital, the company foresaw funding the merger through a combination of cash, new equity capital, and debt financing.

The deal was particularly attractive to Jos. A. Bank because of the growth that this acquisition would promise each company in a competitive retail environment. According to chairman of the board, Robert Wildrick, "Our all-cash proposal would deliver a substantial premium to Men's Wearhouse shareholders and create, in our view, the leading men's apparel and sportswear designer, manufacturer and retailer in the U.S. In addition to capturing significant synergies, we believe that a combination would bring together our complementary capabilities to better serve our customers.” This original proposal however, was rejected by Men’s Wearhouse, which claimed the deal was “opportunistic,” “inadequate,” and “undervalued” the company.

In order to keep negotiations moving forward, Jos. A. Bank proposed raising the acquisition price, but only if Men’s Wearhouse allowed the company to engage in limited due diligence — a request that Men’s Wearhouse denied, saying it wasn’t in the best interest of the company’s shareholders.

Regardless of the deal’s termination, Jos. A. Bank has not dismissed the possibility of entering into further negotiations with Men’s Wearhouse in the future. As Wildrick says, “We continue to believe the transaction between our two companies could be in the best interest of our respective shareholders.” Indeed, following news that the bid had been thrown out, Men’s Wearhouse shares slipped 11 percent before the bell. Eminence Capital, the company’s largest shareholder, expressed disappointment in Men’s Wearhouse, saying this did not speak well of the company’s sense of responsibility to its shareholders. For the time being, Jos. A. Bank plans to pursue other options available and keep the lines of communication open should Men’s Wearhouse board decide it wishes to discuss further deals.