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Jos. A. Bank Defying Men's Wearhouse Said to Pursue Eddie Bauer

Jos. A. Bank Defying Men’s Wearhouse Said to Pursue Eddie Bauer

Jos. A. Bank Defying Men's Wearhouse Said to Pursue Eddie Bauer

Jos. A. Bank Clothiers Inc. (JOSB:US), which
today told Men’s Wearhouse Inc. (MW:US) it won’t enter buyout talks, has
been looking at other acquisitions including retailer Eddie
Bauer, people familiar with the matter said.

Jos. A. Bank sent a letter today telling Men’s Wearhouse
that a $57.50-a-share bid undervalues the company and that
managers see no reason to enter negotiations. Meanwhile, Jos. A.
Bank has held preliminary talks to acquire outdoor clothing
retailer Eddie Bauer, said one of the people, who asked not to
be identified because the talks are private.

The two actions show Hampstead, Maryland-based Jos. A. Bank
is stiffening resistance against any acquisition effort by
larger competitor Men’s Wearhouse. Today’s letter is part of a
five-month drama in which the two companies have tried to
acquire the other, with each insisting on control of a combined
retailer.

Jos. A. Bank has had preliminary talks about buying Eddie
Bauer from owner Golden Gate Capital, one of the people said.
Golden Gate isn’t running an auction and is only talking with
Jos. A. Bank, the person said.

Aaron Palash, a spokesman hired to represent Houston-based
Men’s Wearhouse, didn’t immediately return a call seeking
comment. Tom Davies, a spokesman hired to represent Jos. A.
Bank, declined to comment on Eddie Bauer or other possible
acquisition targets. Paul Kranhold, an outside spokesman for
Eddie Bauer owner Golden Gate, declined to comment. The Wall
Street Journal reported the interest in Eddie Bauer on Feb. 1.

Eddie Bauer

Jos. A. Bank, in an earlier filing, disclosed an interest
in pursuing other targets it didn’t identify. While talks for
Eddie Bauer are the main focus now, one of the other retailers
considered was men’s clothier Brooks Brothers Inc., one of the
people said. Arthur Wayne, a spokesman for Brooks Brothers,
didn’t immediately respond to an e-mail seeking comment.

Golden Gate had committed financing to help Jos. A. Bank
buy Men’s Wearhouse as part of an unsolicited $2.3 billion bid
in October. Men’s Wearhouse rebuffed that overture; the two
sides never entered talks and the two companies have been in
conflict since then.

Men’s Wearhouse made its own offer for Jos. A. Bank in
November, raised that bid in January, and said it will directly
approach Jos. A. Bank’s shareholders with a cash tender offer.

In its letter today, Jos. A. Bank said the Men’s Wearhouse
offer “substantially undervalues our company” and that “we
see no benefit in commencing negotiations with Men’s
Wearhouse.”

Shareholder Pressure

Jos. A. Bank also raised antitrust concerns about any
merger between the two companies even though it had previously
offered to buy Men’s Wearhouse. In the letter, Jos. A. Bank
noted Men’s Wearhouse had received a second request for
information from the Federal Trade Commission, which the company
said happens in only 2 percent of deals.

Any move by Jos. A. Bank that gets in the way of a deal for
Men’s Wearhouse may be received badly by shareholders. Hedge
fund Eminence Capital, which owns 5 percent of Jos. A. Bank, has
pressured the company to negotiate with Men’s Wearhouse and
filed a lawsuit to compel discussions. At least five other
shareholders, who collectively own about 17 percent of the
stock, have asked Jos. A. Bank to enter into negotiations with
Men’s Wearhouse, people familiar with the matter said last week.

Jos. A. Bank strengthened its acquisition-defense plan
early this year to repel its rival. The company on Jan. 3 said
it lowered its poison pill threshold to 10 percent, meaning
Men’s Wearhouse can buy only 10 percent of Jos. A. Bank’s shares
in the tender offer before Jos. A. Bank will issue new, cheaper
shares to dilute the suitor’s stake.

Barring cooperation from Jos. A. Bank, Men’s Wearhouse will
have to wait until its target’s annual meeting for new board
members to be elected and to remove the poison pill.

To contact the reporter on this story:
David Welch in New York at
dwelch12@bloomberg.net

To contact the editor responsible for this story:
Jeffrey McCracken at
jmccracken3@bloomberg.net

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