Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Men's Wearhouse (TLRD) were looking sharp today, up as much as 29%, after Jos. A. Bank (NASDAQ: JOSB) revealed that it had tried to purchase its largest rival in September.
So what: Jos. A. Bank offered $2.3 billion, or $48 a share, to take over Men's Wearhouse, but management rejected the proposal, saying it was opportunistic and inadequate. Men's Wearhouse has had a tumultuous year as founder and executive chairman George Zimmer was ousted from the company in June after an attempt to regain control of the business, though the stock has been relatively stable. Among other comments, Lead Director Bill Sechrest said Jos. A. Bank's bid "fail[ed] to reflect the company's growth strategy and upside potential," though it offered a 42% premium at the time of the bid.
Now what: Investors seemed to approve of the potential merger between the country's two largest men's retailers, as Jos. A. Bank's stock jumped as much as 9%. There's always a chance that Jos. A. Bank could come back with a better bid, but that seems unlikely given the strong statement by Men's Wearhouse. Its decision seems like a bold one as the deal valued its stock at near all-time highs, and shares hit a post-recession peak on today's news, though they still trade for less than the buyout offer. Management's plans for the chain include opening 100 new stores, which would increase its store count by nearly 10%, and leveraging its acquisition of the Joseph Abboud line. Still, this is a category with little growth, and management initiatives are unlikely to change that. For shareholders looking for an exit, today seems like an ideal opportunity.
