FREMONT, Calif., Nov. 26, 2013 /PRNewswire/ -- The Men's Wearhouse
(NYSE: MW) today announced that it has proposed to acquire all of
the outstanding shares of Jos. A. Bank Clothiers (Nasdaq: JOSB)
common stock for $55.00 per share in
cash, representing an implied enterprise value of approximately
$1.2 billion.
The Men's Wearhouse proposal represents a 45% premium over Jos.
A. Bank's unaffected enterprise value and a 32% premium over Jos.
A. Bank's closing share price on October 8,
2013, the day prior to the public announcement of Jos. A.
Bank's proposal to acquire Men's Wearhouse. The transaction
represents a 9.1x enterprise value to last twelve months ("LTM")
Adjusted EBITDA multiple (assuming $133
million of LTM Adjusted EBITDA as of August 3, 2013), a significant premium to Jos. A.
Bank's proposal to acquire Men's Wearhouse. Men's Wearhouse
intends to finance the transaction with a combination of balance
sheet cash and debt financing.
"Following Jos. A. Bank's unsolicited public proposal to acquire
Men's Wearhouse, our Board of Directors evaluated a number of
alternatives to deliver value to our shareholders," said
Bill Sechrest, Lead Director of the
Board of Men's Wearhouse. "After a thorough review, our Board
concluded that an acquisition of Jos. A. Bank by Men's Wearhouse
has strategic logic and the potential to deliver substantial
benefits to our respective shareholders, employees and
customers. In reaching our determination, we considered a
number of factors including Men's Wearhouse's advantage in scale,
growth and performance, long history as a prudent steward of
capital, successful acquisition track record and experienced
management team. We believe we are the right acquiror for
this combination and that our experienced management team is best
positioned to execute the integration of our companies and achieve
the synergies that would result. We are ready to engage with
the Jos. A. Bank's Board immediately."
Doug Ewert, President and Chief
Executive Officer of Men's Wearhouse, said, "Our compelling
proposal provides Jos. A. Bank's shareholders with a substantial
premium and immediate liquidity for their investment. The
transaction will be substantially accretive to Men's Wearhouse's
earnings in year one, and the combined company will have a strong
balance sheet with the operational flexibility to successfully
execute on its strategic plan. Together, we can create the
premier men's apparel retailer, with enhanced scale and a broader
best-in-class offering for our valued customers, which we expect to
drive significant shareholder value."
Strategic and Financial Benefits of the Men's Wearhouse
Proposal
- Provides compelling value for both companies'
shareholders: The Men's Wearhouse proposal provides Jos. A.
Bank's shareholders immediate liquidity and substantial value for
their investment. The Men's Wearhouse proposal represents a
45% premium over Jos. A. Bank's unaffected enterprise value as of
October 8, 2013, the day prior to the
public announcement of Jos. A. Bank's proposal to acquire Men's
Wearhouse, and a multiple of 9.1x enterprise value to LTM Adjusted
EBITDA.
Men's Wearhouse shareholders would benefit from approximately
$100 to $150 million of run-rate
annual synergies realized over three years through improving
purchasing efficiencies, optimizing customer service and marketing
practices, and streamlining corporate functions. The
transaction will be substantially accretive to Men's Wearhouse's
earnings in the first year following closing.
- Creates the premier men's apparel retailer: The enhanced
scale of the combined company will enable Men's Wearhouse and Jos.
A. Bank to become the fourth largest U.S. men's apparel retailer.
The combined company would have more than 1,700 total stores
and pro forma sales of more than $3.5
billion. Building on the two companies' complementary
business models, the combined company would better serve customers
in more locations and optimize merchandising and sourcing
capabilities, which is crucial in the rapidly evolving and highly
competitive retail environment.
- Structure will enable combined company to succeed: Given
Men's Wearhouse's advantage in scale, growth and performance, this
combination is best facilitated through an acquisition of Jos. A.
Bank by Men's Wearhouse. The Men's Wearhouse proposal does
not require any costly third-party equity investment and is not
conditioned on financing. Men's Wearhouse expects to finance
the transaction with a combination of balance sheet cash and debt
financing. Furthermore, a combination with Men's Wearhouse as
the acquiror would result in substantially lower leverage with pro
forma debt to LTM Adjusted EBITDA of approximately 2.8x, which
affords both brands the operational flexibility to execute on their
strategic plans. The transaction would also enable Men's
Wearhouse to maintain its quarterly dividend of $0.18 per share. The strong free cash flow
generated by the combined company would enable rapid deleveraging
as well as strong future return of capital.
In addition, the Men's Wearhouse management team has a proven
track record of successful acquisitions, having integrated more
than 600 stores and over 7,000 employees in connection with its
previous acquisitions of Joseph
Abboud, After Hours and Moores. Men's Wearhouse would
expect a smooth integration, as there will be no rebranding or
remodels required – Jos. A. Bank's store banner would remain in
place. Management would consist of the most qualified
individuals from both companies, and Men's Wearhouse is confident
that its deep-rooted corporate culture of customer service will
appeal to Jos. A. Bank employees and customers, and that
implementing the best practices of both companies will drive
operational and financial success.
Men's Wearhouse has delivered its proposal to Jos. A. Bank's
Board of Directors. Below is the text of the letter that was
sent to Jos. A. Bank's Board of Directors:
November 26, 2013
Robert N. Wildrick
Chairman of the Board of Directors
Jos. A. Bank Clothiers, Inc.
251 Royal Palm Way, Suite 101
Palm Beach, FL 33480
wildrick@jos-a-bank.com
Facsimile: (561) 805-7471
Dear Robert:
In considering Jos. A. Bank's earlier proposal to acquire The
Men's Wearhouse, Inc., the Board of Directors of Men's Wearhouse
also evaluated a number of alternatives to deliver value to our
shareholders. Based on our Board's thorough review, we have
concluded that an acquisition of Jos. A. Bank by Men's Wearhouse
has strategic logic and has the potential to deliver substantial
benefits to our respective shareholders, employees and
customers. By combining our two companies, we can better
serve customers in more locations and optimize our merchandising
and sourcing capabilities. Such developments are crucial in
our rapidly evolving and highly competitive retail environment.
This letter formally conveys to you the following proposal,
which has been approved by our Board of Directors: The
Men's Wearhouse is prepared to offer $55.00 per share in cash for all of the
outstanding shares of Jos. A. Bank's common stock. This price
represents a 45% premium over Jos. A. Bank's unaffected enterprise
value and a 32% premium over the closing share price on
October 8, 2013, the day prior to the
public announcement of Jos. A. Bank's proposal. As Jos. A.
Bank's current cash, cash equivalents and short-term investments
balance of $333 million (as of
August 3, 2013) represents a
significant portion of its equity value at approximately
$11.90 per share, or 29% of the
unaffected market capitalization, we believe that a premium to
enterprise value represents the most meaningful measure of the
value that our proposal offers to Jos. A. Bank's shareholders,
paying a premium for the operating business and valuing the Jos. A.
Bank cash dollar for dollar. Additionally, our offer
represents a 9.1x enterprise value to LTM Adjusted EBITDA multiple
(assuming $133 million of LTM
Adjusted EBITDA as of August 3,
2013), a significant premium to Jos. A. Bank's offer for
Men's Wearhouse. By any measure, we believe our proposal
represents a compelling opportunity that your shareholders will
find extremely attractive.
This proposal is a compelling proposition and our advantage in
scale, growth and performance clearly makes this transaction
structure the right decision for both companies'
shareholders. As the leading men's specialty retailer in
North America, Men's Wearhouse had
more than twice the sales of Jos. A. Bank in the last twelve
months and has a proven track record of creating value for
shareholders, with total shareholder returns of 75% over the last
three years, versus 50% for the S&P 500. With a proven
acquisition track record, Men's Wearhouse is the right acquiror for
this combination. We are well-suited to optimize the
potential of our respective platforms and brands, and best
positioned to execute the integration of our companies and achieve
the synergies that would result. Moreover, an acquisition by
Men's Wearhouse of Jos. A. Bank would result in a lower debt burden
for the combined companies and affords both brands the operational
flexibility to execute on their strategic plans.
Our proposal is not conditioned on financing. The
transaction is expected to be funded by a combination of cash on
our balance sheet and debt financing. Our proposal is not
subject to outside third party equity, not only solidifying our
ability to consummate a transaction but retaining the value of the
benefits of a combination for both of our shareholders.
Additionally, our largest shareholder, Eminence Capital, who is
also one of your large shareholders, has publicly articulated their
strong desire to see this combination effected.
We believe this all-cash transaction is compelling for your
shareholders as they would receive immediate liquidity at a
substantial premium to the market's assessment of Jos. A. Bank's
value. Our proposal would deliver immediate, certain value to
your shareholders that is superior to what we believe you can
reasonably expect to create as a standalone company.
Importantly, we expect a smooth integration as there will be no
rebranding or remodels required – Jos. A. Bank's store banner will
remain in place. Management will consist of the most
qualified individuals from both companies. We are confident
Men's Wearhouse's deep-rooted corporate culture of customer service
will appeal to Jos. A. Bank employees and customers, and that by
implementing the best practices of both companies we will drive
operational and financial success.
Our strong preference is to work with you to negotiate a
mutually acceptable transaction and avoid unnecessary costs. We
have reviewed all publicly available information regarding Jos. A.
Bank and we are prepared to conduct limited due diligence
immediately, including a meeting with senior management. We
will move expeditiously to negotiate definitive documentation in
parallel with our due diligence review.
This letter does not represent or create any legally binding or
enforceable obligations. No such obligations will be imposed
on either party unless and until a definitive agreement is signed
by both Men's Wearhouse and Jos. A. Bank.
We look forward to reaching a transaction that creates value for
all of our shareholders and are prepared to meet with you
immediately to discuss the same.
Sincerely,
Douglas S. Ewert
President, Chief Executive Officer and Director
cc:
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BofA Merrill
Lynch
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J.P. Morgan
Securities LLC
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Willkie Farr &
Gallagher LLP
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BofA Merrill Lynch and J.P. Morgan Securities LLC are serving as
financial advisors to Men's Wearhouse, and Willkie Farr & Gallagher LLP is serving as
legal advisor.
Founded in 1973, Men's Wearhouse is one of North America's largest specialty retailers of
men's apparel with 1,137 stores. The Men's Wearhouse, Moores
and K&G stores carry a full selection of suits, sport coats,
furnishings and accessories in exclusive and non-exclusive
merchandise brands and Men's Wearhouse and Tux stores carry a
limited selection. Most K&G stores carry a full selection
of women's apparel. Tuxedo rentals are available in the Men's
Wearhouse, Moores and Men's Wearhouse and Tux stores.
Additionally, Men's Wearhouse operates a global corporate apparel
and workwear group consisting of Twin Hill in the United States and Dimensions, Alexandra
and Yaffy in the United Kingdom. Investors can find
additional information at http://ir.menswearhouse.com/.
This press release contains forward-looking information.
Forward-looking statements are not guarantees of future performance
and a variety of factors could cause actual results to differ
materially from the anticipated or expected results expressed in or
suggested by these forward-looking statements. The
forward-looking statements are made pursuant to the Safe Harbor
provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements may be significantly
impacted by various factors, including, but not limited to: actions
by governmental entities, domestic and international economic
activity and inflation, success, or lack thereof, in executing our
internal operating plans and new store and new market expansion
plans, including successful integration of acquisitions,
performance issues with key suppliers, disruption in buying trends
due to homeland security concerns, severe weather, foreign currency
fluctuations, government export and import policies, aggressive
advertising or marketing activities of competitors; and legal
proceedings. Future results will also be dependent upon our ability
to continue to identify and complete successful expansions and
penetrations into existing and new markets and our ability to
integrate such expansions with our existing operations. These
statements also include assumptions about our offer to acquire Jos.
A. Bank (including its benefits, results, effects and timing) that
may not be realized. Risks and uncertainties related to the
proposed transaction include, among others: in the event a
definitive transaction agreement is executed, the risk
that Jos. A. Bank's shareholders do not approve the
transaction; uncertainties as to the timing of the transaction; the
risk that regulatory or other approvals required for the
transaction are not obtained, the risk that the other
conditions to the closing of the transaction are not satisfied;
and, in the event the transaction is consummated, risks related to
the costs and difficulties related to the integration of Jos. A.
Bank's businesses and operations with Men's Wearhouse's business
and operations; the inability to obtain, or delays in obtaining,
cost savings and synergies from the transaction; unexpected costs,
charges or expenses resulting from the transaction; litigation
relating to the transaction; and the inability to retain key
personnel. Other factors that may impact the forward-looking
statements are described in the Company's annual report on Form
10-K for the fiscal year ended February 2,
2013 and Forms 10-Q. Men's Wearhouse is under no
obligation (and expressly disclaims any such obligation) to update
or revise any forward-looking statement that may be made from time
to time, whether as a result of new information, future
developments or otherwise. For additional information on
Men's Wearhouse, please visit the Company's websites at
www.menswearhouse.com, www.mooresclothing.com, www.kgstores.com,
www.twinhill.com, www.dimensions.co.uk and www.alexandra.co.uk.
Contacts:
Ken Dennard
Dennard - Lascar Associates
(832) 594-4004
ken@dennardlascar.com
http://ir.menswearhouse.com/
Dan Katcher / Tim Lynch / Andrea
Rose
Joele Frank, Wilkinson Brimmer
Katcher
(212) 355-4449
SOURCE The Men's Wearhouse