In a dramatic turn of events, Men's Wearhouse (MW) received and promptly rejected a takeover bid from rival Jos. A. Bank (JOSB). All cash at $48 per share, a more than 36% premium to where shares closed on Tuesday afternoon and Men's Wearhouse turned it down flat. Either the team at Men's has a wildly inflated sense of self-worth or something is happening here.
Men's Wearhouse's stated explanation was that Jos. A. Bank's "inadequate" offer was an opportunistic attempt to take advantage of a drop in Men's Wearhouse shares after the company lowered its earnings forecast last month. The explanation rather willfully ignores the fact that Men's Wearhouse has been looking frayed around the edges for a while. Sales growth and earnings are forecast to be negative for both this quarter and the critical Christmas selling season.
The Return of George Zimmer?
Jos A Bank offered a struggling company an all cash deal worth 4x where MW shares were trading in 2009. There has to a better reason the board rejected the offer. The best guess is the board is holding out for a hero, a white knight to come in and raise the stakes. Enter for CEO George Zimmer.
Recall that last summer Men's Wearhouse unceremoniously dumped Zimmer with almost no explanation. Twisting the knife further, the company edited Zimmer's voice and trademark "You're gonna like the way look" tagline out of commercials that were already on the air. As if that wasn't bad enough the commercials in question were tied into a donation program for the recently unemployed!
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