The Men’s Wearhouse, Inc. (MW) Lawsuit With Jos. A. Bank Expedited

The Men’s Wearhouse, Inc. (MW) Lawsuit With Jos. A. Bank Expedited

The often hostile battle between The Men’s Wearhouse, Inc. (NYSE:MW) and its smaller rival, Jos. A. Bank Clothiers Inc (NASDAQ:JOSB), is headed for court in an expedited fashion.

A Delaware judge ruled on Tuesday that Men’s Wearhouse lawsuit blocking Jos. A. Bank’s acquisition plans to acquire Eddie Bauer could proceed.  The acquisition is viewed as an attempt to block Men’s Wearhouse takeover plans of Jos. A. Bank, who has been fighting the attempt.

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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.  Then the tables turned.

After being the target of hostile bid, Men’s Wearhouse turns tables

In late December, Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) rejected The Men’s Wearhouse, Inc. (NYSE:MW)’s $55 per share takeover bid, saying the board believed the offer undervalued the company. At that time, Robert Wildrick, chairman of Jos. A. Bank had indicated that the firm would  “…continue to review acquisition opportunities that would represent strong strategic fit with our company and provide opportunity to leverage our core competencies to drive meaningful growth, synergies, and substantial value creation over the long-term.”  The acquisition opportunities may have included Eddie Bauer, although a specific target was not stated at the time.

After the December unsolicited takeover offer, Jos. A. Bank instituted a “poison pill” shareholder rights plan to thwart the unwanted “hostile actions” of Men’s Wearhouse.

Yesterday, The Men’s Wearhouse, Inc. (NYSE:MW) raised its offer for Jos. A. Bank Clothiers Inc (NASDAQ:JOSB) to $63.50 per share. As ValueWalk previously reported, as a sweetener to the deal, Men’s Wearhouse also mentioned in its statement that it could potentially increase its bid up to $65 per share if it could undertake limited due diligence and if the Eddie Bauer deal is pulled and costs no more than $48 million to terminate.

Eddie Bauer acquisition viewed as defensive measure, but did Jos. A. Bank refer to it last year?

In today’s court ruling the judge decided to expedite the lawsuit because, in part, the Eddie Bauer deal was seen as a defensive maneuver. “The allegations of the complaint, taken as a whole, create a colorable basis to believe that the features of the Eddie Bauer transaction are such that in their totality they may well fall outside the range of reasonableness,” Judge Laster said, according to a court transcript.  At the time Jos. A. Bank had initially rejected the Men’s Wearhouse deal, as previously noted, they mentioned other potential acquisitions

Overlapping ownership

As previously reported in ValueWalk, 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 a 8% stake in each retailer. Eminence Capital was disappointed with The Men’s Wearhouse, Inc. (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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Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)
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