By Chris Peters
(Reuters) - Men's Wearhouse Inc (MW) mounted a hostile $1.61 billion bid for Jos. A. Bank Clothiers Inc (JOSB) in an attempt to break the resistance of its smaller rival and pacify investor demand for a merger of the suit retailers.
Men's Wearhouse offered $57.50 per share for Jos. A. Bank, above its previous bid and a 6 percent premium to the stock's close on Friday. Premarket trading was thin in shares of both companies, which share some of the same investors.
By upping its offer and taking it to every Jos. A. Bank shareholder, Men's Wearhouse is raising the stakes in a protracted battle between rivals intent on playing the lead role in the creation of a combined chain with 1,700 stores.
The offer, higher than its previous bid of $55 per share, will also test the poison pill defense adopted by Jos. A. Bank on Friday. The company lowered the trigger to 10 percent from 20 percent to make a takeover more difficult.
Men's Wearhouse Chief Executive Doug Ewert said the company would prefer to work with Jos. A. Bank, but would pursue its target regardless.
"We are committed to this combination and, accordingly, we are taking our offer directly to shareholders," Ewert said.
Men's Wearhouse also said it would nominate two independent directors for election to Jos. A. Bank's board.
Jos. A. Bank could not be reached for immediate comment outside regular U.S. business hours.
'I GUARANTEE IT'
Fremont, California-based Men's Wearhouse was founded 40 years ago by George Zimmer, known to U.S. television audiences for his advertising catchphrase, "You're going to like the way you look - I guarantee it."
Zimmer was ousted by the board in June after arguing for a sale of the company to an investment group.
Jos. A. Bank, a century-old retailer of men's tailored and casual clothing, triggered the latest shareholder battle with a $2.3 billion bid for Men's Wearhouse last year that was swiftly rebuffed by its larger rival.
The retaliatory offer from Men's Wearhouse - a tactic called the Pac-Man defense after the 1980s video game in which Pac-Man turns on the ghosts trying to kill him - followed pressure to merge from its largest shareholder, New York-based hedge fund Eminence Capital LLC.
Eminence, which during a presentation in November also revealed a stake of about 5 percent in Jos. A. Bank, has previously said that it supported a merger of the two companies.
There is significant overlap elsewhere between shareholders of both companies.
Two of Jos. A. Bank's top five shareholders, including Fidelity and Wellington Management, are also among the 30 largest shareholders in Men's Wearhouse, according to Thomson Reuters data.
Men's Wearhouse said its nominees for the board of Jos. A. Bank were John Bowlin, a former chief executive of Miller Brewing Co, and Arthur Reiner, a former executive of Macy's Inc (NYS:M).
Men's Wearhouse said its offer would close on March 28, unless extended.
Men's Wearhouse operates more than 1,100 stores under the Men's Wearhouse, Moores and K&G banners. Jos. A. Bank has more than 600 stores in the United States.
Shares of Jos. A. Bank, which have risen 8 percent since Men's Wearhouse made its initial offer in November, closed at $54.41 on Friday on the Nasdaq.
Men's Wearhouse shares closed at $50.59 on the New York Stock Exchange.
(Additional reporting by Sruthi Ramakrishnan in Bangalore; Editing by Kirti Pandey and Robin Paxton)
- Investment & Company Information