Jos. A. Bank Tightens Shareholder Rights Plan ‘Poison Pill’

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Jos. A. Bank Tightens Shareholder Rights Plan ‘Poison Pill’
By Dwight Burdette (Own work) [CC BY 3.0], via Wikimedia Commons

Jos. A. Bank Clothiers, Inc (NASDAQ:JOSB)  amended its shareholder rights plan, also known as a “poison pill” amid its continuing takeover fight with fellow men’s specialty apparel retailer, The Men’s Wearhouse Inc (NYSE:MW).

Board cuts ownership threshold

The board of directors tightened the poison pill plan by decreasing the ownership threshold of shareholders from 20% to 10% of the outstanding common shares of Jos. A. Bank Clothiers, Inc (NASDAQ:JOSB).

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The company explained that its decision was prompted by the “hostile actions” of The Men’s Wearhouse, Inc (NYSE:MW). Jos. A. Bank Clothiers, Inc (NASDAQ:JOSB) previously rejected its rival’s $1.5 billion takeover bid claiming that the offer significant undervalued the company, its near and long-term potential, and it is not in the best interest of its shareholders.

Jos. A. Bank leveling the playing field

“The board felt it was appropriate to protect the company’s shareholders by leveling the playing field and ensuring that the Jos. A. Bank Rights Agreement has the same triggering ownership threshold as that of the Men’s Wearhouse Rights Agreement,” according to the press statement of Jos. A. Bank Clothiers, Inc (NASDAQ:JOSB).

The Men’s Wearhouse (NYSE:MW) first received an unsolicited offer from Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) to acquire all of its outstanding shares for $2.3 billion or $48 per share, but its board of directors rejected it in October. The board said the offer significantly undervalued the company., Men’s Wearhouse lead director described Jos. A Bank’s proposal as “opportunistic.”  Its board of directors implemented a poison pill with a 10% ownership threshold and submitted its own proposal to acquire Jos. A. Bank.

Overlapping shareholders

Jos. A. Bank Clothiers, Inc (NASDAQ:JOSB) and The Men’s Wearhouse Inc (NYSE:MW) have overlapping shareholders including BlackRock, Inc (NYSE:BLK), Vanguard, and Eminence Capital.

BlackRock owns more than 8% stake in each retailer. Eminence Capital was disappointed with The Men’s Wearhouse (NYSE:MW) when the company failed to engage in negotiations with Jos. A. Bank Clothiers, Inc (NASDAQ:JOSB) regarding its proposal.

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