Jos. A. Bank Clothiers has rebuffed a $1.5 billion takeover bid by Men’s Wearhouse, prompting its larger rival to explore other ways to satisfy investors’ hunger for a merger of the suit retailers.
Shares of Men’s Wearhouse fell about 1 percent on Monday after Bank rejected its offer, the latest move in a protracted battle between two retailers intent on playing the lead role in the creation of a combined entity.
“I expect this tug-of-war to persist for some time,” Anthony Michael Sabino, a professor at St. John’s University’s Peter J. Tobin College of Business, told Reuters.
Fremont, Calif.-based Men’s Wearhouse last month offered $55 per share for Bank, turning the tables on its smaller rival only weeks after Bank had bid for Men’s Wearhouse.
The retaliatory offer from Men’s Wearhouse — an unusual tactic known as the Pac-Man defense after the 1980s video game — followed pressure to merge from its largest shareholder, New York-based hedge fund Eminence Capital.
A combined company would have 1,700 stores that sell suits and rent tuxedos, a scale that has in the past raised antitrust questions about a merger.
In a statement on Monday, Bank said its board had unanimously rejected the offer.
“Our board undertook a thorough review and determined that the per-share consideration in the proposal made to us by Men’s Wearhouse was simply not in the best interest of our shareholders,” said Bank Chairman Robert Wildrick.
Within two hours, Men’s Wearhouse issued a statement expressing its “surprise” at the rejection, adding that it would consider all of its options “to make this combination a reality.”
Men’s Wearhouse said it would consider nominating director candidates at Bank’s next annual shareholders’ meeting. The date of this meeting has not yet been announced.