Men’s Warehouse Finalize Purchase of Jos. A. Bank

After extended dealings, including overtures and enticements from other parties, Men’s Warehouse and Jos. A. Bank will merge.

Men’s Wearhouse Inc. will pay $65 per share, a 5% premium to Jos. A. Bank Clothiers Inc.’s closing price on Monday, which was $61.83. The total of the acquisition will be $1.8 billion.

According to The Wire, the agreement ends a months-long bargain between both companies that began last October. Jos. A. Bank offered to buy its larger rival for $2.3 billion. Men Warehouse scoffed at it and turned the tables by offering to buy its rival for less at $1.54 billion. Both companies would go back and forth, until earlier this month, Men’s Warehouse offered to buy at $63.50 per share, but would raise the bid to $65 per share if certain conditions were met.

Because of the merger becoming official, both companies saw an increase in their shares, as reported by the Rocky Mountain Telegram. Men’s Warehouse’s stock was up nearly 5% to $57.14, while Jos. A. Bank increased 4% to $64.22. Also, the combining of both will make them the fourth-largest menswear retail chain in the United States. With a combined total of 1,700 stores and annual sales of $3.5 billion, they will fall just behind Macy’s, Kohl’s, and J.C. Penny.

However, the merger also terminates Jos. A. Bank’s deal to acquire the parent company of Eddie Bauer, which sells rugged outerwear.

Despite the aggressive negotiations, both companies are expecting a smooth integration which is expected to close by the third quarter of this year. In a joint press release, they said shareholders of both companies will benefit from about $100 million to $150 million in savings, which will be realized over three years as the company streamlines its duplicate corporate functions and improves sourcing and merchandising. Nothing was mentioned about layoffs or management changes, but with most acquisitions and mergers, they usually do happen, which is indirectly expressed through Robert N. Wildrick, a spokesman for Men’s Warehouse, in a press statement:

Our board has been rigorously focused on pursuing a path for our shareholders that maximizes value created. Management will consist of the most qualified individuals from both organizations.

Analysts say there’s a bright future for the combined companies. Men’s Warehouse is relatively healthy with a 4% increase since last year. Not to mention, both companies have complementary businesses. Men’s Warehouse also has Moores and K&G. Jos. A. Bank’s specialty is on establishing clientele through deals, such as their “buy one suit, get three free”.

In the end, the people who benefit the most are the customers. Richard Jaffe, a Stifel Nicholause analyst, simply said:

There are real cost savings and opportunities to turn around the business.

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