Mens Wearhouse, which less than two weeks ago let a takeover bid from Jos. A. Bank Clothiers expire without entering discussions, offered Tuesday to buy its smaller rival for about $1.54 billion.
The proposal of $55 a share is 8.7 percent higher than Jos. A. Banks closing price Monday and 32 percent higher than on Oct. 8, the day before it bid for Mens Wearhouse. Jos. A. Bank rose above the offer price in New York trading.
Mens Wearhouse CEO Doug Ewert, five months after succeeding ousted founder George Zimmer, is turning the tables on Jos. A. Bank. The deal, sought by the retailers largest shareholder, Eminence Capital, would create a company with about 1,700 stores. It also would add to earnings in the first year, helped by as much as $150 million in annual savings in purchasing, customer service and marketing over three years, Mens Wearhouse said in a statement.
This still would be a positive for owning Mens Wearhouse stock, Keith Moore, an event-driven strategist at Stamford, Conn.-based MKM Holdings, said in a phone interview.
Jos. A. Bank said Tuesday in a statement that it had received the proposal and that its board would evaluate it and respond in due course.
Shares of the company, based in Hampstead, Maryland, surged 11 percent on Tuesday to close at $56.29. Houston-based Mens Wearhouse rose 7 percent to close at $50.60.
Investors are saying they have a little bit left in their pocket to raise the offer, Louis Meyer, a special-situations analyst at Oscar Gruss & Son Inc. in New York, said in a telephone interview.
Mens Wearhouse is taking a page from whats been dubbed the Pac-Man defense: named for the video game character that could, from time to time, eat the ghosts chasing after it. It isnt commonly used. In 1999, Frances Total SA and Elf Acquitaine SA made competing bids for each other with Total eventually prevailing in a $54 billion deal.
The term was coined during Bendix Corp.s 1982 attempt to take over Martin Marietta Corp. That contest ended with another company, Allied Corp., acquiring both Bendix and 39 percent of Martin Marietta.
Jos. A. Bank in October offered to buy Mens Wearhouse for about $2.3 billion. Mens Wearhouse rejected that bid, saying it was too low and was opportunistic because it came at a moment of upheaval for the company, which in June ousted Zimmer as executive chairman over disagreements about strategy.