Both companiesí boards have approved the transaction, the retailers said Tuesday in a statement. Jos. A. Bank also will terminate a separate deal to buy the Eddie Bauer brand and cancel a plan to buy as much as $300 million of its own stock.
Tuesdayís agreement settles a feud Jos. A. Bank began in October with an offer for its larger rival. Menís Wearhouse turned down that proposal and countered with multiple bids for Jos. A. Bank, all of which were rejected as too low. Jos. A. Bank said it would begin talks with Menís Wearhouse last month following a sweetened $1.78 billion offer.
ďItís a strong acquisition that is mutually beneficial to both companies and shareholders of both companies,Ē Mark Montagna, a Nashville, Tenn.-based analyst for Avondale Partners, said in a phone interview.
The combined company will have more than 1,700 U.S. stores and sales of about $3.5 billion on a pro forma basis, the retailers said. Jos. A. Bank can benefit from Menís Wearhouseís tuxedo-rental business, while Menís Wearhouse can learn from Jos. A. Bankís ability to inexpensively source products, Montagna said.
Jos. A. Bank imperiled the possibility of a tie-up with Menís Wearhouse in February, when it agreed to buy the Eddie Bauer brand in an $825 million deal that would have created a company too big for its suitor to acquire.
The deal with Menís Wearhouse will result in as much as $150 million of annual savings realized over three years, the companies said Tuesday. Jos. A. Bankís approximately 600 stores wonít be rebranded, the companies said.
Jos. A. Bank had been told by five of its largest shareholders to start talking to its rival about a sale, people with knowledge of the matter said in January.
Eminence Capital, a New York-based hedge fund that owns shares in both companies, supported the most recent bid. Eminence Chief Executive Officer Ricky Sandler said in February that the offer represented ďa superior alternativeĒ for shareholders over the Eddie Bauer deal.
The $65-a-share purchase price is 56 percent higher than Jos. A. Bankís closing price on Oct. 8, the day before its offer for Menís Wearhouse was publicly disclosed.
Menís Wearhouse had sued Jos. A. Bank, saying it was ďeconomically irrationalĒ for its rival to use the Eddie Bauer deal to fend off a merger. Menís Wearhouse also accused Jos. A. Bank directors of breaching their fiduciary duties by enacting a shareholder rights plan, or poison pill, to make it more difficult for an acquirer to buy the company.
Golden Gate Capital Corp., the San Francisco-based private- equity firm that was selling Eddie Bauer, said it respects Jos. A. Bankís decision to terminate the deal and is pleased to continue owning the brand.
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