Jos. A. Bank Clothiers Inc. (JOSB), after rejecting a bid from Men’s Wearhouse Inc. (MW) last week, strengthened its acquisition-defense plan to head off moves its larger rival could make in their continuing takeover battle.
The so-called poison pill was toughened up in a few ways. For one, the plan now is activated if someone buys 10 percent of the shares, instead of 20 percent previously. It also can be triggered if someone gains control of such a stake using derivatives such as options, whereas before they would have actually had to own the shares.
The stronger takeover protections, which Jos. A. Bank detailed in a filing and statement today, mark the latest move in the takeover battle of men’s apparel chains that began in October when Jos. A. Bank offered $2.3 billion for Men’s Wearhouse. The target rejected that offer and later made its own $1.54 billion proposal for Jos. A. Bank that was rebuffed on Dec. 23. Men’s Wearhouse then said it would consider nominating directors to Jos. A. Bank’s board after its bid failed.
Jos. A. Bank said that its poison pill’s new 10 percent threshold levels “the playing field” by matching Men’s Wearhouse’s takeover defense.
Jos. A. Bank fell 0.5 percent to $54.41 at the close in New York. The shares gained 29 percent last year. Houston-based Men’s Wearhouse gained 0.4 percent to $50.59 and advanced 64 percent in 2013.
Men’s Wearhouse bid $55 a share for Jos. A. Bank while Jos. A. Bank offered $48 a share for its larger competitor.
Both companies have said that a combination of the two largest U.S. retailers of their kind would yield savings and boost profit margins. Men’s Wearhouse also has a lucrative tuxedo-rental business that could be expanded to Jos. A Bank’s more than 600 stores.
Jos. A. Bank pounced in October at a moment of turmoil for Men’s Wearhouse after it had cut its profit forecast the previous month and removed founder George Zimmer as executive chairman over strategy disagreements in June.
Men’s Wearhouse’s last-reported annual sales of about $2.5 billion were more than twice those of Jos. A. Bank. It also has almost double the number of stores.
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