The stock price of The Men’s Wearhouse, Inc. (NYSE:MW) climbed to as much as $48.56 per share after its CEO Doug Ewert instructed the financial advisors of the company to review strategic options including a merger with Jos. A. Bank Clothiers Inc (NASDAQ:JOSB).

Men's Wearhouse

Men’s Wearhouse shareholder sent a letter to Ewert

Eminence Capital, the largest shareholder of The Men’s Wearhouse, Inc. (NYSE:MW) sent a letter to Ewert stating that it was encouraged by his comments, particularly his assurance that the board of directors of the retailers take their fiduciary duty seriously. The hedge fund owns 9.8% stake in the company.

The hedge fund is also pleased with the company’s move to review available strategic options such as a merger with Jos. A. Bank Clothiers Inc (NASDAQ:JOSB), and a significant return of capital to shareholders.

Eminence Capital urged the board of directors of The Men’s Wearhouse, Inc. (NYSE:MW) to quickly complete its review, and start negotiations with the board of Jos. A. Bank.

The hedge fund wrote that the shareholders “strongly encourage you to promptly complete your review process and inform investors of your progress. We also fully expect you and the board, given the explicit commitment to explore all options, to actively engage with JOSB before their deadline.”

Earlier this month, The Men’s Wearhouse, Inc. (NYSE:MW) sent a letter to the board of directors of Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) rejecting its request to conduct due diligence to its proposal to acquire the company for $48 per share in cash. Ewert emphasized that the offer was significantly undervalues the company’s stock and it is not in the best interest of its shareholders.

“Our Board and management team are committed to creating value for our shareholders.  We are enthusiastic about Men’s Wearhouse’s prospects and are confident that our strategic plan will deliver more value to our shareholders than Jos. A. Bank’s inadequate, highly-conditional proposal.  We thank our shareholders for the support we have received,” said Ewert.

The shares of Men’s Wearhouse were undervalued

Eminence Capital went activist on The Men’s Wearhouse, Inc. (NYSE:MW) after refusing to conduct due diligence on the offer of Jos. A. Bank Clothiers Inc (NASDAQ:JOSB). The hedge fund indicated in its regulatory filing that the shares of Men’s Wearhouse were undervalued, and the $48 a share offer represents a 42.4% premium of the closing price of the stock on November 6.

The hedge fund told the board of The Men’s Wearhouse, Inc. (NYSE:MW) it would fully exercise its rights as a shareholder and will hold the board accountable if it does not take actions regarding its request to evaluate every strategic option available and to begin negotiations with Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) for a possible merger.