Men's Wearhouse Rejects Jos. A. Bank's $2.3 Bln Buyout Offer

(RTTNews) - The Men's Wearhouse, Inc. (MW) Wednesday announced that its board of directors has determined to reject an unsolicited, non-binding proposal from retailer JoS. A. Bank Clothiers, Inc. (JOSB) to acquire the company for $48 per share in cash, representing a total equity value of about $2.3 billion.

The Men's Wearhouse board noted that the proposal significantly undervalues the company and its strong prospects for continued growth and value creation. The board also opined that the offer is not in the best interests of the company or its shareholders. The stock gapped open higher and is up about 28 percent in the morning trade.

Doug Ewert, president and chief executive officer of Men's Wearhouse said the company has the potential to generate substantially more value for shareholders than the Jos. A. Bank proposal. Ewert also claimed a strong operating platform and a clear path to accelerating growth and profitability.

The company said its decision was after careful evaluation with the assistance of its financial and legal advisors. The proposal from Jos. A. Bank is subject to substantial debt and equity financing.

Founded in 1973, Men's Wearhouse is one of North America's largest specialty retailers of men's apparel with 1,137 stores.

Men's Wearhouse also said its recent second quarter performance was impacted by difficult market conditions, which many other retailers faced during the quarter, including Jos. A. Bank.

Last month, Men's Wearhouse had reported 28 percent fall in second-quarter profit, hurt by one-time charges and an Easter related shift in quarterly tuxedo rental revenues. The company also cut its full-year earnings outlook.

Earlier today, JoS. A. Bank confirmed that it has made a non-binding proposal to acquire all of the outstanding shares of Men's Wearhouse, in response to inquiries following news reports of discussions with Men's Wearhouse about a possible business combination.

Jos. A. Bank intended to fund the transaction by a combination of cash on its balance sheet, new equity capital and debt financing.

BofA Merrill Lynch and J.P. Morgan Securities LLC are serving as financial advisors to Men's Wearhouse, and Willkie Farr & Gallagher LLP is serving as legal advisor.

MW is currently trading at $45.03, up $9.79 or 27.78 percent, on a volume of 8.53 million shares.

Jos. A Bank shares are trading up 7.83 percent at $44.92.