Jos. A. Bank Clothiers is buying the 94-year-old Eddie Bauer brand for $825 million in cash and stock.
The men’s clothing company, which is trying to fend off a takeover bid by Men’s Wearhouse, will pay $564 million in cash, some borrowed from Goldman Sachs, plus 4.7 million shares of new Jos. A. Bank stock priced at $56 a share.
After the deal, Golden Gate Capital, which owns Eddie Bauer, will hold a 16.6 percent stake in Jos. A. Bank and name two persons to its board.
Golden Gate, through Bauer’s parent, Everest Topco, could pocket an additional $50 million in cash if Eddie Bauer’s adjusted earnings for fiscal 2014 hit a certain mark.
Eddie Bauer will immediately add to Jos. A. Bank’s profits, the company said in a statement.
To offset the dilution in Bank shares brought about by the creation of the 4.7 million new shares, Bank said it would buy back up to 4.6 million shares at $65 a share.
Jos. A. Bank shares closed Thursday at $56.94, up slightly, but were off 3.5 percent in pre-market trading after the Eddie Bauer deal was announced. Men’s Wearhouse closed Thursday at $46.53, but its shares were off sharply, as much as 9.7 percent, in pre-market trading.
Jos. A. Bank has long been interested in Eddie Bauer and first approached Golden Gate in early 2012 about buying the chain — but was rebuffed, it revealed in a regulatory filing.
Golden Gate then teamed with Jos. A. Bank last year in an attempt to buy Men’s Wearhouse for $48 a share, or $2.3 billion. That offer was rejected by Men’s Wearhouse.
Soon after, Men’s Wearhouse made its own $1.5 billion offer for Jos. A. Bank — an overture that, likewise, was rejected by its men’s apparel retailing rival. Both sides, in separate statements at different times, agreed that it would be best for the companies to combine.
With the two companies’ executives and boards apparently unable to agree on price or who would be the surviving company, a deal has not been forthcoming.
Instead, Jos. A. Bank recently took up again with Golden Gate and this time it seems as if they found a more receptive seller. But given Bank’s past relationship with the private-equity firm, another motive could be in play.
For example, while the agreement to buy Eddie Bauer would seem to put an end to the effort by Men’s Wearhouse to buy Jos. A. Bank — as it would make the combined company too expensive — there is a clause in the Bank-Bauer agreement that would allow Bank to walk away from the purchase should it receive a takeover bid that it feels is superior.
So Wall Street may have not heard the last chords of the Bank-Men’s Wearhouse mating dance.