Jos. A. Bank Willing to Consider Raising Proposed Purchase for Men's Wearhouse
Jos. A. Bank Clothiers, Inc. (Nasdaq: JOSB) today sent the following letter to the Chief Executive Officer of The Men's Wearhouse, Inc. (NYSE: MW). It states that Jos. A. Bank is willing to consider raising the acquisition price it proposed to Men's Wearhouse on September 18, 2013 of $48 per share, or a 42% premium to the closing price of Men's Wearhouse common stock on the day prior, if Jos. A. Bank is given the opportunity to conduct limited due diligence in order to determine that such an increase would be justified. Jos. A. Bank notes that it believes its September 18^th proposal represents superior, immediate value for the shareholders of Men's Wearhouse when compared to the uncertain discounted present value of the long-term plan issued by Men's Wearhouse earlier this week.
The letter finally states that, to date, despite the proposed premium and the strong, positive reaction to it in the market, the Board of Directors of Men's Wearhouse has refused to discuss the proposal with Jos. A. Bank. If the Men's Wearhouse Board continues this stance and has not engaged in good faith discussions with Jos. A. Bank by Thursday, November 14, 2013, Jos. A. Bank will terminate its proposal. Full text of the letter can be found below.
October 31, 2013
Mr. Douglas S. Ewert, Chief Executive Officer The Men's Wearhouse, Inc. 6100 Stevenson Boulevard Freemont, California 94538
On September 18, 2013, Jos. A. Bank made a confidential, non-binding proposal to acquire all of the outstanding shares of Men's Wearhouse for $48 per share in cash, representing a premium-to-market of over 40% based on the closing price of Men's Wearhouse's shares the day before we made our proposal. On October 9, 2013, following an unfortunate news leak (which did not originate from us) describing our proposal, we were forced to make our offer public. Your board rejected our proposal saying that it significantly undervalued Men's Wearhouse and since then has made no effort to engage in any discussions with us on behalf of your shareholders. This letter is to inform you that Jos. A. Bank is willing to consider raising our proposed acquisition price if we are given the opportunity to conduct limited due diligence in order to determine that such an increase would be justified.
Our evaluation of Men's Wearhouse was necessarily based solely on publicly available information. We believe that if we were provided with access to a limited amount of non-public information we could promptly determine whether we could increase our proposed acquisition price. We are, of course, prepared to execute a mutually acceptable non-disclosure agreement to provide Men's Wearhouse with the assurance that any information provided will be kept confidential.
Several days ago, you published an investor update comparing our proposed transaction against your financial and operating plans for Men's Wearhouse as an independent public company. You went to great lengths to disparage Jos. A. Bank, pointing out the relative size of the companies (yes, we are smaller), suggesting our proposal was opportunistic (yes, we agree it is a great opportunity), and suggesting that our financing is not credible (we can't imagine how it could be more credible at this stage of the process given the quality of our partners). We believe that your shareholders would be best served by your providing us with a limited amount of non-public information so that we can advise you whether we can improve our price. You can then responsibly compare your standalone prospects with the value of our revised proposal. Before you foreclose our offer from your investors, we would hope and expect that you would evaluate in an informed manner the alternatives to create shareholder value. While we believe strongly that our $48 per share cash proposal represents superior, immediate value for the shareholders of Men's Wearhouse when compared to the uncertain discounted present value of your long-term plan, we are nevertheless prepared to consider a price increase.
The increase in the value of Men's Wearhouse shares since our proposal became public makes it obvious that the shareholders of Men's Wearhouse strongly support our transaction. In fact, the market believes that this combination creates over $900 million of value (based on the proposed price for Men's Wearhouse shares and yesterday's closing price for Jos. A. Bank shares compared to the closing price of both stocks on the date prior to our proposal). Despite the market premium generated by our proposal, your board has refused to discuss the proposal with us. Under the circumstances, there is no reason for this process to drag on. If your board has not engaged in good faith discussions with us by November 14, 2013, we will terminate our proposal in order to consider other strategic alternatives which we have been investigating.
I hope you will agree to engage with us in a thoughtful and responsible dialog.
Robert N. Wildrick, Chairman of the Board Jos. A. Bank Clothiers, Inc.
This letter and our proposal constitute a preliminary, non-binding indication of interest to acquire the outstanding shares of Men's Wearhouse, and our proposal is being submitted based on the understanding that it is not an offer that is capable of being accepted and that there will be no binding agreement between us or any commitment or obligation on either party with respect to the proposal or a possible transaction unless and until a definitive agreement is executed by Men's Wearhouse and Jos. A. Bank. We reserve the right to discontinue discussions regarding, and withdraw, our proposal at any time. Our proposal is subject to a number of conditions, including, among other things, our satisfaction with the results of due diligence in our sole discretion, the negotiation and execution of a mutually satisfactory definitive agreement, the negotiation and execution of satisfactory definitive equity and debt financing agreements and the approval of a transaction by our Board of Directors.
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