Jos. A. Bank Clothiers Inc. rejected Men's Wearhouse latest acquisition offer late Thursday, calling it "inadequate" but agreed to meet with its rival to discuss a possible merger, heightening a months-long takeover battle between the retailers.
Since September, the two menswear companies have been engaged in an elaborate cat-and-mouse game. Jos. A. Bank Clothiers Inc. initially offered to buy Men's Wearhouse but was rebuffed. Men's Wearhouse turned the tables and offered to buy Jos. A. Bank, kicking off more expensive acquisition offers and a series of maneuvers (a lawsuit and a proposed deal by Jos. A. Bank to buy Eddie Bauer, another retail firm).
In its latest offer, Men's Wearhouse Inc. said it would pay $63.50 per share in a deal valued at $1.8 billion to acquire Jos. A. Bank. It also indicated it would be willing to pay as much as $65 per share after a review of Jos. A. Bank's books.
"[O]n the basis of your unsolicited revised proposal indicating a willingness to pay a higher price, our board has authorized our meeting with you...," Jos. A. Bank Chief Executive Robert N. Wildrick wrote to Douglas S. Ewert, his counterpart at Men's Wearhouse.
The letter made clear Jos. A. Bank was prepared to allow its rival to review its books but said any offer would need to come quickly.
"Time is of essence," Wildrick wrote. "Given the compelling nature of the Eddie Bauer transaction from a shareholder value creation standpoint, and in light of its certainty of closing, we are only prepared to give you a limited amount of time to come forward with your best offer."
Jos. A. Bank's announcement earlier this month that it would acquire Eddie Bauer was seen by many analysts as an attempt to thwart a Men's Wearhouse takeover. Under the terms of the deal, Jos. A. Bank would have to pay a $50-million termination fee if the deal were to fall through. Analysts said that would make it more expensive for Men's Wearhouse to take over its rival.
Men's Wearhouse, based in Fremont, Calif., also filed suit to block the Eddie Bauer deal.
Men's Wearhouse shares were up Friday $2.94, or 5.83%, to $53.36. Jos. A. Bank shares were up $1.33, or 2.21%, to $61.63.