Fremont, Calif., and Hampstead, Md. – Formal apparel retailers Men’s Wearhouse (NYSE: MW) and Jos. A. Bank Clothiers (Nasdaq: JOSB) have entered into a definitive agreement under which Men’s Wearhouse will acquire all of the outstanding shares of common stock of Jos. A. Bank for $65 per share in cash, or $1.8 billion. The boards of directors of both companies have unanimously approved the transaction.
Combined, Men’s Wearhouse and Jos. A. Bank will have more than 1,700 stores in the United States. The companies have about 23,000 employees and sales of $3.5 billion on a pro-forma basis, making the combined company the fourth-largest men’s apparel retailer.
In October 2013, Jos. A. Bank offered to buy Men’s Wearhouse for a reported $2.3 billion. Since that offer, Men’s Wearhouse had counter-offered to purchase Jos. A. Bank for the past six months leading up to the companies reaching the current agreement. Jos. A. Bank had rejected Men’s Wearhouse’s previous offers of $1.5 billion in November and $1.6 billion in December.
“We are pleased to have reached this agreement with Jos. A. Bank, which we believe will deliver substantial benefits to our respective shareholders, employees and customers,” says Doug Ewert, president and CEO of Men’s Wearhouse. “Together, Men’s Wearhouse and Jos. A. Bank will have increased scale and breadth, and Jos. A. Bank’s strong brand and complementary business model will broaden our customer reach. We expect the transaction will be accretive to Men’s Wearhouse’s earnings in the first full year.”
As part of the deal, Jos. A. Bank has terminated its $825 million offer for Seattle-based Eddie Bauer. Jos. A. Bank will have to pay a $48 million penalty fee to Golden Gate Capital, the private equity owner of Eddie Bauer.
Men’s Wearhouse said it will keep Jos. A. Bank’s store banner in place following the deal’s closing. The Fremont-based company will finance the transaction with a combination of balance sheet cash and committed debt financing from BofA Merrill Lynch and JPMorgan Chase Bank NA.
BofA Merrill Lynch and J.P. Morgan Securities LLC are serving as financial advisors to Men’s Wearhouse, and Willkie Farr & Gallagher LLP is serving as legal advisor.
Goldman, Sachs & Co. and Financo LLC are serving as financial advisors to Jos. A. Bank, and Skadden, Arps, Slate, Meagher & Flom LLP and Guilfoil Petzall & Shoemake LLC are serving as its legal advisors.
“Our board has been rigorously focused on pursuing a path for our shareholders that maximizes value creation. We have been committed to pursuing a range of strategic alternatives to achieve that goal,” says Robert Wildrick, chairman of the board of Jos. A. Bank. “On behalf of our board and management team, I would like to express our deep appreciation to our employees for their hard work in making Jos. A. Bank the great company it is today. We look forward to working together with Men’s Wearhouse to ensure a smooth transition.”
The deal is expected to close in the third quarter of 2014, pending regulatory approval from the Federal Trade Commission. Men’s Wearhouse has extended its expiration date of its tender offer to 5 p.m. EST today.
Men’s Wearhouse’s stock price closed Tuesday at $57.14 per share, up dramatically from $29.17 per share at this time last year.
Jos. A. Bank’s stock price closed Tuesday at $64.22 per share, also up substantially from $41.94 per share at this time last year.
— John Nelson