Jos. A. Bank Clothiers (NASDAQ:JOSB) decided to abandon its proposal to acquire its competitor Men’s Wearhouse (NYSE:MW) for $48 per share in cash.
Robert Wildrick, chairman of the board of Jos. A. Bank explained that the company made its decision “in order to consider other strategic alternatives,” which the company have been evaluating since the board of directors of Men’s Wearhouse rejected its request for limited due diligence and to engage in any discussion regarding the offer.
“The main thing we’re looking for is something similar to what we’re doing. Men’s Wearhouse was at the top of our list of strategic alternatives, now we have to look at the other things on our list,” said Wildrick
Wildrick also stated that Jos. A. Bank still believes that a transaction with Men’s Wearhouse could be in the best interest of its respective shareholders. He added that it might consider a new proposal in the future if circumstances change or if Jos. A. Bank receives an invitation to discuss an acquisition.
Men’s Wearhouse rejected Jos. A. Bank proposal
The board of directors of Men’s Wearhouse rejected the proposal of Jos. A. Bank because it believed that the proposed $48 per share acquisition price undervalues the shares of the company, and it failed to reflect its growth strategy and upside potential. Men’s Wearhouse CEO, Doug Ewert emphasized that the company is “well positioned to deliver compelling value to shareholders,” and it is pursuing strategic initiatives to enhance its profit margin.
Eminence Capital to demands special meeting of shareholders
Eminence Capital, the single largest shareholder of Men’s Wearhouse with 9.8% stake in the company was disappointed with the failure of the board of the retailer to engage in merger discussions with Jos. A. Bank.
According to the hedge fund, the board of Men’s Wearhouse demonstrated that it is not committed to fulfill its basis fiduciary duties to shareholders, and it is contented with a status quo.
As a result, Eminence Capital submitted a preliminary statement with the Securities and Exchange Commission (SEC) seeking for a special meeting of the shareholders of Men’s Wearhouse to vote on several issues such as amending the bylaws of the company that would allow the removal of directors without cause before their next annual meeting.
In a statement, Ricky Sandler, CEO of Eminence Capital said, “We continue to encourage the Board to take immediate steps to complete its review of strategic options, including a merger with JOSB, that was disclosed in our November 12 letter. If the board fails to do so, our special meeting initiative will give shareholders the tools to hold the board accountable for its failed leadership.”