Jos. A. Bank to Acquire Eddie Bauer

Jos. A. Bank Clothiers Friday agreed to acquire retailer Eddie Bauer for $825 million in cash and stock, the latest development in its continuing takeover battle with Men's Wearhouse Inc.

Jos. A. Bank is offering Golden Gate $564 million in cash and about 4.7 million new shares at $56 a share for Eddie Bauer.

The deal is expected to immediately add to Jos. A. Bank's earnings, the company said. Jos. A. Bank said the deal would be financed in part by borrowing from Goldman Sachs, which is also serving as an adviser.

Jos. A. Bank also said it would buyback up to 4.6 million of its common shares at $65 a share, or up to $300 million, if it completes the Eddie Bauer purchase, offsetting the dilution from the stock portion of the acquisition.

The Wall Street Journal reported earlier in February that Jos. A. Bank was in talks with Eddie Bauer's owner, private-equity firm Golden Gate Capital, to acquire the men's retailer.

The deal comes as Jos A. Bank and Men's Wearhouse continue their monthslong battle to buy each other. Jos. A. Bank announced its intent to purchase larger rival Men's Wearhouse in October. After that effort was rebuffed, Men's Wearhouse mounted its own effort to buy Jos. A. Bank, which was in turn rejected.

Jos. A. Bank's bid for Men's Wearhouse was backed by Eddie Bauer's owner, Golden Gate Capital. Golden Gate bought Eddie Bauer out of bankruptcy in 2009 for $286 million in cash plus the assumption of hundreds of millions of dollars in liabilities.

That Jos. A. Bank is exploring another deal doesn't come as a surprise. The company, which turned down Men's Wearhouse's $1.5 billion offer in December, has said multiple times that it might pursue other takeover targets. In a securities filing in January, Jos. A. Bank said: "The company has been and is continuing to engage in preliminary negotiations that could result in an extraordinary transaction, including the acquisition of a business or assets from a third party that would be material to the company."

Eddie Bauer makes casual clothing, sportswear and outerwear for men and women. The retailer has around 370 stores in the U.S. and Canada.

Kevin Kingsbury, Dana Mattioli and Dana Cimilluca contributed to this article.

Write to Everdeen Mason at [e-mail]

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