HAMPSTEAD, Md.—Men’s Wearhouse has rejected an offer from rival Jos. A. Bank Clothiers. The $2.3 billion offer, which became public early this morning, was made in mid-September. At $48 per share, it was a 42 percent premium on the share price as of September 17, the day before the offer was made. Jos. A. Bank was offering cash on its balance sheet combined with new equity from Golden Gate Capital and debt financing.
“After careful review and deliberation, our board of directors has determined that Jos. A. Bank’s proposal significantly undervalues Men’s Wearhouse and fails to reflect the company’s growth strategy and upside potential,” said a statement by Bill Sechrest, lead director of the Men’s Wearhouse board. “We believe Jos. A. Bank’s unsolicited proposal is opportunistic, subject to unacceptable risks and contingencies, and would deprive our shareholders of the value inherent in Men’s Wearhouse for inadequate consideration.”
Men’s Wearhouse CEO Doug Ewert added, “The Board and management team are confident that continuing our strategic plan will create more value for shareholders than Jos. A. Bank’s inadequate, highly conditional proposal. Men’s Wearhouse has undertaken a number of strategic initiatives to accelerate growth and profitability, including our recent acquisition of JA Holding Inc. and the Joseph Abboud brand. We believe we are well positioned to deliver compelling value to our shareholders.”
The rejection followed a flurry of news stories reporting the offer this morning.
In its rejection statement, Men’s Wearhouse says that the offer fails to reflect its leading market position, and that its shareholders have more to gain under the current position. It also noted that the unsolicited offer “is a highly opportunistic attempt to exploit a temporary dislocation in the stock price of Men’s Wearhouse in order to deprive Men’s Wearhouse’s shareholders of the intrinsic value of their investment.” Finally, Men’s Wearhouse raised antitrust concerns.
“We believe Men’s Wearhouse’s shareholders would want their board to explore with us the immediate and certain value they would receive in a transaction,” said Jos. A. Bank chairman Robert Wildrick in a statement released before the rejection. “We have always admired Men’s Wearhouse and believe these two great companies, when combined, will create continued growth and sustainable value for our shareholders, greatly enhanced benefits for our customers, and exciting opportunities for our employees.”
Goldman, Sachs & Co. and Financo, LLC advised Jos. A. Bank on the offer.