The Fremont, California-based men’s suit retailer has made its second offer to take over its smaller rival, Jos. A. Bank.
The takeover attempt is just the latest in a series of talks between the two companies. Last year, Jos. A. Bank offered up $2.3 billion in an effort to take over Men’s Wearhouse, but the offer was rejected. Instead, Men’s Wearhouse has now responded with an offer of its own: $1.61 billion to do the same to Jos. A. Bank. The offer is an increase from the $1.54 billion offered just six weeks ago. The increase has received a positive response from investors: shares of both companies were up on the heels of the announcement, with the stock of Jos. A. Bank seeing a rise of over four percent.
Though the purchaser and the price have been in doubt, the eventual outcome seems a near-certainty, at least according to some experts. According to Belus Capital Advisors analyst Brian Sozzi, “anybody who follows corporate America can see that these two companies have to be joined. They are specialty retailers in a price-competitive industry with limited growth prospects.”
Though both companies have been playing hardball in the merger talks, the move could be made easier if Men’s Wearhouse carries through with its plans to take its offer directly to shareholders. The overlap between shareholders of both companies is significant. Eminence Capital, LLC, for instance, owns a 9.8 percent share of Men’s Wearhouse and a five percent stake in Jos. A. Bank. If some of the largest mutual shareholders support the move – as Eminence is – the deal may pick up steam.
The two specialty stores are among the final holdouts in a market traditionally dominated by department stores like Macy’s and Bloomingdales. Men’s Wearhouse operates more than 1,100 stores in the U.S., while Jos. A. Bank operates approximately half that number.
Men’s Wearhouse indicated that the current offer would terminate on March 28, absent an extension.