Men's Wearhouse has rejected a $2.3 billion bid from Jos. A. Bank to takeover the struggling retailer The New York Times reported Wednesday.
"We believe that Men's Wearhouse and Jos. A. Bank are ideal partners - the strategic wisdom of this transaction is compelling," Jos. A. Bank chairman Robert Wildrick told Men's Wearhouse chief executive Doug Ewert in a letter The Times reported. "By combining our two companies, we can together create the best men's apparel and sportswear designer, manufacturer and retailer in the U.S."
Jos A. Bank offered to pay $48 a share in cash for Men's Wearhouse, 36 percent above its closing price Tuesday. The company also indicated it would use cash on hand, sell some of its stock, and increase debt to fund the deal.
The company also joined forces with buyout firm Golden Gate Capital, who was going to invest $250 million to finance the transaction. The Men's Wearhouse board claims the bid underestimated the company's worth and did not take the shareholders best interests into account the Times reported.
"The board and management team are confident that continuing our strategic plan will create more value for shareholders than Jos. A. Bank's inadequate, highly conditional proposal," Ewert told the Times in a statement.
Another reason for not accepting the deal, Men's Wearhouse said it had twice as many stores as Jos. A Bank, and experienced 13 consecutive quarters of growth in same store sales through its main locations, while Jos A. Bank's revenue decreased three consecutive quarters.
In the past, Jos A. Bank introduced the idea to merge with its competitor three months after Men's Wearhouse let its founder and chairman George Zimmer go following a power struggle. over privatizing the company.
