Jos. A. Bank Plans Cash, Stock Purchase Of Eddie Bauer

Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) has made it official. The retail chain says it plans to buy the Eddie Bauer brand, reports Bloomberg. That deal is based on an $825 million enterprise value and includes $564 million in cash and the repurchase of Jos. A. Bank’s own stock with an 18% premium.

Jos. A. Bank interested in Eddie Bauer outdoor line

Eddie Bauer is perhaps best known for its outdoor clothing. In a statement, Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) said it sees “substantial opportunities for growth and synergies” in uniting its brand with Eddie Bauer’s. As part of the deal, Golden Gate Capital Corp., a private-equity firm which owns Eddie Bauer, becomes a “significant” shareholder in Jos. A. Bank.

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The retail chain said it expects its earnings per share to increase immediately. It also sees the “potential for substantial accretion in 2015 and beyond.” Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) obtained a definitive agreement to purchase Everest Holdings LLC, which is Eddie Bauer’s parent company.

Jos. A. Bank has been interested for some time

The retail chain said it has long been interested in purchasing the Eddie Bauer brand. In fact, Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) said it first reached out to Golden Gate early in 2012. After the two companies are combined, the retailer said it expects to be able to generate over $2.1 billion in revenue this year. The company reported just $1.05 billion in sales for the year which ended Feb. 2, 2013.

Jos. A. Bank to issue new shares

Under the terms of the deal, Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) will also issue 4.7 million new shares to Everest Topco at a value of $56 a share. The firm receives the other $50 million based on Eddie Bauer’s EBITDA for the 2014 fiscal year. According to Jos. B. Bank, the purchase price is a 9.5 times multiple of 2013 estimated adjusted EBITDA. That excludes $25 million of potential synergies. At the close of the transaction, Everest will own approximately 16.6% of Jos. A. Bank’s shares.