Men’s Wearhouse Turns Tables, Offers to Buy Jos. A. Bank for $1.2 Billion

In a surprise move, The Men’s Wearhouse Inc. on Tuesday proposed buying rival Jos. A. Bank Clothiers Inc. for $1.2 billion.

The offer to buy the Hampstead, Md.-based men’s apparel chain at a premium for $55 per share came after Men’s Wearhouse rejected a $2.3 billion acquisition bid from Jos. A. Bank and refused to enter merger talks despite pressure from investors.

“After a thorough review, our board concluded that an acquisition of Jos. A. Bank by Men’s Wearhouse has strategic logic and the potential to deliver substantial benefits to our respective shareholders, employees and customers,” said Bill Sechrest, lead director of the board of Men’s Wearhouse.

Jos. A. Bank issued a statement Tuesday saying its board will evaluate the Men’s Wearhouse proposal.

Sechrest said the board began evaluating alternatives after Jos. A. Bank made its unsolicited proposal to Houston-based Men’s Wearhouse in October.

“We believe we are the right acquirer for this combination and that our experienced management team is best positioned to execute the integration of our companies and achieve the synergies that would result,” he said in the announcement.

The proposal represents a 32 percent premium over Bank’s closing share price on Oct. 8, the day before Jos. A. Bank’s proposal to Men’s Wearhouse became public, and is a “significant” premium to Jos. A. Bank’s proposal, Men’s Wearhouse said.

The Houston chain said it would finance the deal with balance sheet cash and debt financing.

“Our compelling proposal provides Jos. A. Bank’s shareholders with a substantial premium and immediate liquidity for their investment,” Doug Ewert, president and CEO of Men’s Wearhouse, said in a statement. “Together we can create the premier men’s apparel retailer with enhanced scale and a broader best-in-class offering for our valued customers.”

In a letter to Jos. A. Bank chairman Robert N. Wildrick, Ewert said the proposal is not dependent upon financing and instead would rely on cash and debt financing.

“We expect a smooth integration as there will be no rebranding or remodels required – Jos. A. Bank’s store banner will remain in place,” Ewert said in the letter. “Management will consist of the most qualified individuals from both companies.”

Eminence Capital LLC, Men’s Wearhouse’s largest single shareholder, had waged a campaign to urge the retailer to re-start merger talks with Jos. A. Bank.

“We are pleased to see that the board of Men’s Wearhouse agrees with us and recognizes the substantial benefits of merging with Jos. A. Bank,” Eminence CEO Ricky Sandler said in a statement Tuesday responding to the Men’s Wearhouse offer.