Updated, 12:33 p.m. | Men’s Wearhouse agreed on Tuesday to buy its rival Jos. A. Bank Clothiers for $65 a share in cash, ending months of hostilities between the two retailers.
The companies and their advisers worked through the weekend and finally agreed on a deal that values Jos. A. Bank at $1.8 billion, and will bring together the two leaders in affordable menswear.
Among the terms of the deal, Jos. A. Bank will terminate its agreement to acquire Eddie Bauer.
Despite months of public bickering between the two companies, Douglas S. Ewert, the Men’s Wearhouse chief executive, welcomed his new colleagues in a statement. “All of us at Men’s Wearhouse have great respect for the Jos. A. Bank management team and are eager to work with Jos. A. Bank’s talented employees,†he said.
Robert N. Wildrick, the chairman of Jos. A. Bank’s board who had led deal talks for the company, said that after months of negotiations, he had obtained the best possible deal for shareholders.
“The transaction we are announcing today clearly reflects the success of our efforts, providing a substantial premium over any price at which our stock has ever traded, including a 56 percent premium since our interest in Men’s Wearhouse became public last October, and allowing our shareholders to receive immediate consideration for their holdings,†he said in a statement.
The combined company expects to be the fourth-largest men’s apparel retailer in the United States, with annual revenue of about $3.5 billion.
Jos. A. Bank attempted to acquire Men’s Wearhouse in October for $48 a share, or $2.3 billion, in a surprise takeover bid just months after George Zimmer, the Men’s Wearhouse founder, was pushed out as chairman of the company.
Men’s Wearhouse swiftly rejected the offer, and was soon exploring buying the shoemaker Allen Edmonds in a deal some viewed as a defensive move.
By late October, pressure for Men’s Wearhouse to engage in deal talks was ratcheting up, with Jos. A. Bank offering to raise its bid if it gained access to Men’s Wearhouse’s books, and the hedge fund Eminence Capital called for Men’s Wearhouse to engage in talks.
But by mid-November, Jos. A. Bank dropped its bid, and just weeks later Men’s Wearhouse struck back, offering $1.5 billion for its onetime suitor and paving the way for the deal announced on Tuesday.
Men’s Wearhouse will finance the deal with debt financing from Bank of America Merrill Lynch and JPMorgan Chase, but said it expected to deliver quickly because of the strong cash flow from the combined companies.
Bank of America and JPMorgan advised Men’s Wearhouse, and Willkie Farr & Gallagher was the company’s legal adviser. Goldman Sachs and Financo were the financial advisers for Jos. A. Bank, and Skadden, Arps, Slate, Meagher & Flom and Guilfoil Petzall & Shoemake provided legal advice.
