Jos. A. Bank, the Hampstead, Md.-company, said it will pay $564 million in cash and about 4.7 million new shares at $56 a share to Eddie Bauer's owner, Golden Gate Capital, a private-equity firm, which will own nearly 17% of Jos. A. Bank shares.
The company said it has been looking for companies to acquire in recent years, and said Eddie Bauer was one of its first choices.
"The acquisition of Eddie Bauer solidifies Jos. A. Bank’s leadership in men’s apparel and adds new categories such as women’s apparel and footwear, to create a powerful, diversified, multi-branded retail platform," Jos. A. Bank said in a statement.
The brands will be run separately, but the combined companies are expected to result in about $25 million in savings by 2015.
The move by Jos. A. Bank to acquire apparel retailer Eddie Bauer is seen by some analysts as a move to thwart a potential takeover by Men's Wearhouse, which is aggressively courting its menswear rival.
Under the terms of the deal, Jos. A. Bank will have to pay Eddie Bauer a 3% termination fee -- or $50 million -- if the deal falls through.
The deal "is intended to make the Men's Wearhouse hostile takeover of Jos. A. Bank more expensive for Men's Wearhouse and deter it," sid Jerry Reisman, a mergers and acquisitions expert and partner at the law firm Reisman, Peirez, Reisman and Capobianco in Garden City, N.Y.
Following the announcement of the acquisition, Jos. A. Bank shares were down $1.12, or 2.04%, to $53.80 in late morning trading.