Jos. A. Bank Clothiers Inc. said it’s willing to consider raising its $2.3 billion takeover bid for larger competitor Men’s Wearhouse Inc. after the offer was rejected this month.
Jos. A. Bank Chairman Robert Wildrick said in a letter sent to Men’s Wearhouse today that he would consider increasing the offer if his company was given access to non-public information so it could conduct limited due diligence. Jos. A. Bank said it will terminate the buyout offer on Nov. 14 if Men’s Wearhouse doesn’t engage in “good faith discussions.”
While Wildrick’s letter shows Jos. A. Bank still is working to combine the two largest male-focused U.S. specialty retailers, shares of both companies fell, signaling investors are skeptical a deal will be completed. Jos. A. Bank dropped 3.8 percent to $47.95 at the close in New York, while Men’s Wearhouse slid 3.1 percent to $42.30.
“The market is saying Jos. A. Bank is going to withdraw their offer and walk away,” Ivan Feinseth, chief investment officer at Tigress Financial Partners LLC in New York, said in a telephone interview. Feinseth has the equivalent of a hold rating on Men’s Wearhouse.
Ken Dennard, a spokesman for Men’s Wearhouse who works for Dennard-Lascar Associates LLC, didn’t respond to voicemail and e-mail requests for comment about Wildrick’s remarks.
Jos. A. Bank, based in Hampstead, Maryland, disclosed its $48-a-share offer on Oct. 9, and Men’s Wearhouse rejected it the same day, saying it undervalued the company and wasn’t in the best interest of investors. Men’s Wearhouse also said that the bid was opportunistic, coming shortly after the firing of founder George Zimmer, known for his starring role in the company’s commercials, as executive chairman over disagreements with the board.
Men’s Wearhouse, based in Houston, adopted a shareholder rights plan that lets investors buy its stock at a discounted price when someone acquires 10 percent or more of the common shares in a transaction not approved by the board.
Jos. A. Bank hasn’t had direct contact with Men’s Wearhouse’s management, Wildrick said in an interview. Three or four large shareholders of both companies have contacted him today expressing desire to see the deal completed, he said, without naming them.
“We can’t have an open-ended offer, but we definitely want to get it done,” Wildrick said. “It makes industry sense.”
Wildrick said in his letter that Jos. A. Bank would consider “other strategic alternatives” if the offer is allowed to expire. He declined to comment on what options the company is considering.
Jos. A. Bank is trying to publicly force Men’s Wearhouse directors to engage in talks as the acquisition attempt already is unfriendly, Mark Montagna, an analyst for Avondale Partners LLC in Nashville, Tennessee, said in a phone interview.
“This really tells you the likelihood of this happening is a lot less than it was before simply because Men’s Wearhouse has not spoken to them, and they only have to hold out for two weeks and not talk to them,” Montagna said in a phone interview. He has the equivalent of a hold rating on shares of Jos. A. Bank. “Ultimately, Men’s Wearhouse has to pick up the phone.”
Men’s Wearhouse may consider a bid for Allen Edmonds Corp., a closely held shoemaker, a person familiar with the matter said earlier this month.
An acquisition of Allen Edmonds won’t deter Jos. A. Bank’s pursuit of Men’s Wearhouse, said another person familiar with Jos. A. Bank’s thinking, who asked not to be identified because the matter is private. Jos. A. Bank considers Allen Edmonds a good fit for itself and for Men’s Wearhouse, the person said.
Men’s Wearhouse Chief Executive Officer Doug Ewert said the retailer is twice as big as Jos. A. Bank, which has “no growth strategy,” Women’s Wear Daily reported, citing an interview with Ewert last week.