Men's Warehouse didn't like the way the deal looked and rejected the unsolicited $2.3B offer calling it highly opportunistic, but felt the 36% premium undervalued the company. They also agreed with my earlier assessment that a merger of these two companies would lead to little outside competition so a deal would likely draw significant antitrust scrutiny.
Men's Wearhouse is the larger company and has about twice as many stores as Jos. A. Bank. Men's Wearhouse has reported 13 consecutive quarters of growth in same store sales (within its core stores), while Jos. A. Bank had a three quarter losing streak. With Men's Wearhouse's stock price having dropped recently, Jos. A. Bank's bid makes a lot of sense, and so does Men's Wearhouse's outright rejection.
In a deal that would corner the market for ridiculous markup followed by buy one get three suits and an iPad free deals, Jos. A Bank Clothiers has offered to buy larger rival Men’s Wearhouse for $2.3B. Jos. A. Bank bid $48 per share, which is a 36% premium over Men’s Wearhouse closing price yesterday of $35.24. Jos. A. Bank believes this deal would enable it to leverage core competences and create synergies. If the deal were to go through the company would lack an obvious competitor, so I wonder if there will be a further investigation on the behalf of consumers.
I’ve mentioned how Men’s Wearhouse recently ousted its founded George Zimmer, and blamed slumping sales on superstitions brides who didn’t want to get married in unlucky 2013. Given their strategy of marking up cheap products then selling multiple at once, I wonder if Jos. A. Bank is also getting troubled retailer J.C. Penney in the deal.