Men's Wearhouse Adds Fiery Lawsuit, More Money to Takeover FightBy
In the takeover business, there’s friendly, hostile, and then there’s Men’s Wearhouse and Joseph A. Bank.
Men’s Wearhouse increased its bid for its smaller rival today by 10 percent, to nearly $1.8 billion, and for good measure filed a lawsuit against the Jos. A. Bank Clothiers board that seeks to halt its purchase of yet another menswear retailer. Jos. A. Bank agreed on Feb. 14 to buy Eddie Bauer for $825 million in an attempt to make itself too big for Men’s Wearhouse to swallow.
The new bid and lawsuit are the latest antics in a takeover battle that has come to resemble a madcap bedroom farce. It all began in October, when Jos. A. Bank tried to buy Men’s Wearhouse for $2.3 billion just after Men’s Wearhouse fired its founder and advertising frontman, George Zimmer. Men’s Wearhouse brusquely rejected the idea of a tie-up, then flipped the situation on its head, mounting what’s known as a “Pac-Man defense” to acquire its would-be acquirer.
Jos. A. Bank’s Eddie Bauer purchase would make a takeover by Men’s Wearhouse much more difficult. In its lawsuit today, Men’s Wearhouse didn’t pull any punches, calling Jos. A. Bank’s defensive moves “a patently unlawful course of conduct.” The suit alleges that the Jos. A. Bank board violated its obligation to act in shareholders’ best interest by pursuing Eddie Bauer and adopting a “poison pill” defense, which makes it difficult for potential acquirers to buy more than 10 percent of the company’s shares.
“The desperate and illegal measures that the JOSB Board has taken to avoid a business combination with TMW,” the lawsuit says, “stand in stark contrast to the zeal with which JOSB encouraged a potential business combination with TMW when the roles were reversed just a few months ago.”
The suit also takes aim at Jos. A. Bank Chairman Robert Wildrick. “Now that Mr. Wildrick and his cronies on the JOSB Board, comprised principally of Mr. Wildrick’s longtime friends from Palm Beach and people who have worked for him for decades, face the prospect of losing their lucrative positions on the JOSB Board, and being thrown out of their jobs, the shoe is on the other foot.”
Shares of Men’s Wearhouse gained 6.4 percent in morning trading on Feb. 24; Jos. A. Bank shares were up 8.2 percent.