After two months of negotiations in which each apparel retailer tried to buy the other, Jos. A Bank has rejected a $1.2 billion offer from The Men’s Wearhouse Inc.
Mark Brohan , Research Director
Two of the most well-known names in men’s apparel and accessories retailing will keep on going their separate ways—at least for now.
After taking about five weeks to consider the deal, Jos. A Bank Clothiers Inc., No. 191 in the Internet Retailer 2013 Top 500 Guide, has rejected an offer valued at $1.2 billion to be acquired by The Men’s Wearhouse Inc. (No. 294).
The rejection of the Men’s Wearhouse offer by Jos. A. Bank brings to closure for the time being a busy couple of months of back-and-forth proposals, with each retailer looking to acquire the other at various points in the process. The Men’s Wearhouse issued a proposal in mid-November to buy all outstanding shares of Jos. A Bank for $55 per share, or about $1.2 billion. The offer came less than two months after Men’s Wearhouse turned down a proposal to be acquired by Jos. A Bank at $48 per share, or around $2.3 billion. Jos. A Bank withdrew its offer Nov. 15.
Jos A. Bank rejected the offer as being too low, and said the deal “significantly would have under-valued the company’s near and long-term potential.” Jos A. Bank also says it will continue to look for more unspecified acquisition opportunities "Our board undertook a thorough review and determined that the per-share consideration in the proposal made to us by Men's Wearhouse was simply not in the best interest of our shareholders,” says Jos. A Bank chairman Robert N. Wildrick. “At the same time, we continue to review acquisition opportunities that would represent a strong strategic fit with our company and provide an opportunity to leverage our core competencies to drive meaningful growth, synergies and substantial value creation over the long term."
Men’s Wearhouse hasn’t said if it will raise its offer to acquire Jos. A Bank. If there would have been any type of final merger by either company, the result would have been a combined e-commerce operation with collective annual sales web sales of about $160 million and combined monthly visits of 3.6 million and monthly unique visitors of 1.4 million, according to web site measurement firm Compete Inc.
A combined Jos. A Bank and Men’s Wearhouse e-commerce operation would have appealed to multiple segments of the men’s apparel and accessories market, including formal wear, sportswear, suits, ties, shoes and tailored clothing, Jos. A Bank said in an Oct. 9 investor’s presentaton. “There was potental to increase Men’s Wearhouse Internet sales utilizing our exisiting e-commerce capabilites,” Jos. A Bank said.
Each retailer had key opportunity to use a merger to offer the men’s apparel and accessories market a much broader offering, says Hana Ben-Shabat, a partner with consulting and market research firm AT Kearney who covers retailing and consumer goods including apparel. With a bigger –e-commerce base, both Jos. A Bank and Men’s Wearhouse also would have had a better chance of growing e-commerce overseas, “They could have shared a lot of synergy,” she says.