Men’s Wearhouse Sues Jos. A. Bank to Push Takeover Offer

Men’s Wearhouse Inc. sued Jos. A. Bank Clothiers Inc. (JOSB), demanding that the retailer’s newly adopted anti-takeover defenses be declared invalid after Men’s Wearhouse increased its buyout offer to about $1.78 billion.

The bid of $63.50 a share may be further increased if Jos. A. Bank agrees to terminate a separate deal to buy Eddie Bauer, Men’s Wearhouse said today in a statement. Men’s Wearhouse said Jos. A. Bank is trying to fend off a merger by engaging in an “economically irrational” deal with Eddie Bauer.

“The Eddie Bauer transaction is little more than a thinly veiled defensive recapitalization hatched to thwart” the Men’s Wearhouse offer “and interfere with the voting rights” of Jos. A. Bank stockholders, Houston-based Men’s Wearhouse said in the complaint filed today in Delaware Chancery Court.

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Men’s Wearhouse accused Jos. A. Bank directors of breaching their fiduciary duties by enacting a shareholder rights plan, or poison pill, to make it more difficult for an acquirer to buy the Hampstead, Maryland-based company. Last month, Jos. A. Bank’s board changed the trigger on its anti-takeover defense so that it’s activated when someone buys 10 percent of the company’s shares, instead of 20 percent.

Men’s Wearhouse is seeking a court order invalidating the poison pill and barring the Eddie Bauer purchase. The company also seeks to block any newly issued Jos. A. Bank shares from being voted at the annual shareholder meeting and to bar the directors from expanding the board in response to Men’s Wearhouse’s offer.

Jos. A. Bank officials weren’t immediately available to comment on the lawsuit.

Jos. A. Bank rose 8.5 percent to $59.73 at 10:03 a.m. New York in Nasdaq Stock Market trading. Men’s Wearhouse gained 7.2 percent to $48.35 on the New York Stock Exchange.

The case is Men’s Wearhouse Inc. (MW) v. Wildrick, CA9383, Delaware Chancery Court (Wilmington)

To contact the reporter on this story: Sophia Pearson in federal court in Philadelphia at spearson3@bloomberg.net

To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net

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