On the same day that Jos. A. Bank (NASDAQ: JOSB ) issued a press release confirming rumors it had made a formal, nonbinding offer to acquire fellow clothier Men's Wearhouse (NYSE: MW ) for $48 a share in an all-cash deal, the board of directors of Men's Wearhouse issued a statement rejecting the offer, calling it "highly opportunistic." The total value of the acquisition offer is approximately $2.3 billion.
Jos. A. Bank's offer represented a 36% premium based on yesterday's closing stock price of Men's Wearhouse of $35.24 a share, and was 42% higher than the Sept. 17 closing price of Men's Wearhouse stock, which was the day before Jos. A. Bank made its offer via phone and a follow-up letter.
The board of directors of Men's Wearhouse said in its statement today that Jos. A. Bank's offer "significantly undervalues Men's Wearhouse and its strong prospects for continued growth and value creation, and is not in the best interests of Men's Wearhouse or its shareholders."
In its press release, Men's Wearhouse cited, among other prospective growth opportunities, its recent $97.5 million acquisition of clothing manufacturer Joseph Abboud as a catalyst for future growth, mitigating the value of the significant premium of Jos. A. Bank's offer.
Jos. A. Bank had intended to utilize cash on its balance sheet, a new equity offering, and debt financing to fund the deal, according to its statement.
During a media call on Wednesday before Men's Wearhouse issued the statement rejecting the bid, Robert N. Wildrick, chairman of the board of Jos. A. Bank, described the proposal as a "win-win situation" for shareholders and consumers.
He told reporters that if the deal was completed, it would create a company that is large enough to compete with the giants nationally and internationally. Wildrick noted that he didn't see this deal as an opportunity to cut costs but rather to improve profits margins and boost sales.
-- Material from The Associated Press was used in this report.