Washington Post – Men’s Wearhouse finally buys Jos. A. Bank – quote by Jerry Reisman
By Amrita Jayakumar
Men’s Wearhouse agreed to buy Maryland-based Jos. A. Bank on Tuesday in a deal worth $1.8 billion, which satisfied both parties and ended nearly six months of hostilities between the two companies. A man walks past a Men’s Warehouse store in New York City.
The battle over men’s clothing is finally over.
Men’s Wearhouse agreed to buy Maryland-based Jos. A. Bank on Tuesday in a deal worth $1.8 billion, ending nearly six months of public hostilities between the menswear retailers.
The combined company will become the country’s fourth-largest men’s retailer, with $3.5 billion a year in sales and more than 1,700 stores across the country, Men’s Wearhouse and Jos. A. Bank said in a joint statement. Jos. A. Bank’s brand will stay independent, they said.
Tuesday’s announcement comes a week after the retailers began negotiating and caps months of public bickering.
The companies, which have competed for budget-conscious customers for years, said Tuesday that they were better off working together. Jos. A. Bank is known for its frequent sales, including “Buy 1 Suit, Get 3 Free” offers, while Men’s Wearhouse promotes itself as a year-round low-cost alternative. Jos. A. Bank has said that customers were becoming immune to its promotions.
“They’re trying to kill each other by one-up promotions,” but that strategy couldn’t last, said Ronald Goodstein, an associate professor of marketing at Georgetown University’s McDonough School of Business. The merger will allow them to cut costs and create a “mega-brand,” he said.
The tussle began in October, when Jos. A. Bank launched a hostile takeover bid of its larger rival. A month later, Men’s Wearhouse countered by offering to buy Jos. A. Bank. That bid was rejected. Meanwhile, Jos. A. Bank said it would acquire outdoor-wear maker Eddie Bauer. The move was a strategic one, industry observers say, designed to block Men’s Wearhouse’s takeover attempts unless it was given a better deal.
Men’s Wearhouse eventually upped its bid for Jos. A. Bank and the two entered into intense negotiations. In the end, Men’s Wearhouse increased its bid for Jos. A. Bank from $1.2 billion to $1.8 billion. As part of the deal, Jos. A. Bank said it will abandon its purchase of Eddie Bauer.
Both companies issued statements absent of any of the recent acrimony.
“We are pleased to have reached this agreement with Jos. A. Bank, which we believe will deliver substantial benefits to our respective shareholders, employees and customers,” Doug Ewert, president and chief executive of Men’s Wearhouse, said in a statement.
“We look forward to working together with Men’s Wearhouse to ensure a smooth transition,” Robert Widrick, chairman of the board at Jos. A. Bank, said in a statement.
After the deal was announced, Men’s Wearhouse’s stock climbed 4.7 percent, to $57.14. Jos. A. Bank’s stock price rose 3.8 percent, to close at $64.22.
“Today was a grand-slam home run for the stockholders in both companies,” said Jerry Reisman, a mergers lawyer based in Garden City, N.Y.
Jos. A. Bank “will enable Men’s Wearhouse to go forward as a much stronger and more profitable company,” he said.
Joseph A. Bank, which was founded in Baltimore in 1905, has more than 600 stores. The companies did not announce whether any of those stores would close. Men’s Wearhouse, which is based in Fremont, Calif., has more than 1,000 stores across the United States and operates a separate brand in the United Kingdom.