Men’s Wearhouse Inc. (MW) was urged by Eminence Capital LLC, which disclosed that it had become the retailer’s largest investor, to engage in takeover talks with Jos. A. Bank Clothiers Inc. (JOSB), whose bid it spurned last month.
Eminence, a New York-based hedge fund, said in a letter to the Men’s Wearhouse board yesterday that while it agreed that Jos. A. Bank’s offer price was too low, the company’s other reasons for rejecting the bid were “disingenuous at best and reckless and misinformed at worst.” The fund said in a filing that it had taken a 9.8 percent stake in Men’s Wearhouse.
Eminence’s involvement in the takeover dispute, which was reported earlier by CNBC, increased speculation that a deal between the two menswear retailers may happen, boosting Men’s Wearhouse’s shares yesterday. Houston-based Men’s Wearhouse rejected Jos. A. Bank’s $2.3 billion offer the day it was made public and said its prospects are better as a standalone company.
Men’s Wearhouse advanced 1 percent to $45.88 at 9:44 a.m. in New York. The shares gained 46 percent this year through yesterday. Hampstead, Maryland-based Jos. A. Bank increased 0.3 percent to $48.45.
Ken Dennard, a spokesman for Men’s Wearhouse who works for Dennard-Lascar Associates LLC, didn’t respond to a voicemail seeking comment on the filing. Tom Davies, a spokesman for Jos. A. Bank who works for Kekst & Co., declined to comment on the filing.
Eminence said there should be a price Jos. A. Bank would be willing to pay that would fairly compensate Men’s Wearhouse’s shareholders. The fund also said it would exercise its right as a shareholder to hold Men’s Wearhouse’s board accountable if it fails to engage in talks with Jos. A. Bank and instruct financial advisers to evaluate other options by Nov. 11.
Jos. A. Bank’s bid came at a moment of turmoil for Men’s Wearhouse, which cut its profit forecast in September and removed founder George Zimmer as executive chairman over strategy disagreements in June. Jos. A. Bank Chairman Robert Wildrick said in a letter he would terminate the bid if Men’s Wearhouse doesn’t engage in discussions.
Men’s Wearhouse last month adopted a shareholder rights plan after rejecting the offer. The plan, which expires Sept. 30, 2014, allows investors to acquire Men’s Wearhouse stock at a discounted price when someone acquires 10 percent or more of the company’s common shares in a transaction not approved by the board. If the buyer is a passive institutional investor, the trigger is a 15 percent stake.
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