Jos A Bank Eyes Raising Offer for Men's Wearhouse

Jos. A. Bank Clothiers Inc. (JOSB) said it would consider raising its $2.3 billion bid for Men's Wearhouse Inc. (MW) if it is given the opportunity to conduct limited due diligence but warned it will drop its offer in two weeks if Men's Wearhouse's board refuses to engage in talks.

The company earlier this month confirmed that it offered $48 a share in cash for Men's Wearhouse. But the unsolicited takeover offer, which would create a nationwide powerhouse in men's apparel, was rejected by Men's Wearhouse's board as undervaluing the company.

In a letter Thursday to Men's Wearhouse CEO Douglas Ewert, Jos. A. Bank Chairman Robert Wildrick said an increase to the offer price is contingent on the result of limited due diligence that would justify an increase.

"While we believe strongly that our $48 per share cash proposal represents superior, immediate value for the shareholders of Men's Wearhouse when compared to the uncertain discounted present value of your long-term plan, we are nevertheless prepared to consider a price increase," he said.

If Men's Wearhouse continues refusing to engage in discussions about the offer, Jos. A. Bank said it will terminate its proposal Nov. 14 so it can consider other strategic options that it has been investigating.

That possibility sent shares of both companies lower in recent trading. Men's Wearhouse slid 6% to $41.05, while Jos. A. Bank was off 4.8% to $47.44.

Jos. A. Bank also said the increase in the value of Men's Wearhouse shares since the proposal became public "makes it obvious" that shareholders strongly support the deal.

Representatives for Men's Wearhouse weren't immediately available for comment.

The same day it rejected Jos. A. Bank's takeover bid, Men's Wearhouse adopted a shareholder rights plan to prevent new investors from gaining sizable control of the apparel retailer.

Write to Nathalie Tadena at [e-mail]

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