Momentum Shifts Once More in Jos. A. Bank Takeover

The tug-of-war between the men's clothing retailers tugs in a new direction once again.

Feb 3, 2014 at 3:48PM

And so comes another strange twist in the Jos. A. Bank (NASDAQ:JOSB) and Men's Wearhouse (NYSE:MW) takeover saga, one that could be seen not only as the former thumbing its nose at its rival but also tweaking the nose of the hedge fund operator trying to make it happen.


In a letter yesterday to the board of directors of Men's Wearhouse, the men's clothing retailer utterly rejected the latest pitch its rival made while turning on them all the arguments they used when rejecting Bank's original bid.

Jos. A. Bank points out that Men's Wearhouse opposed its takeover offer because they had antitrust concerns, but apparently don't have them with their own bid. Why? Furthermore, the FTC has sent a "second request" for documents about the offer, a relatively rare occurrence, but Men's Wearhouse says it anticipated the request all along. Bank wants to know why they didn't let shareholders know they expected it from the get-go. And while Men's Wearhouse wants Jos. A. Bank to form a special committee to review the offer, it neglects to inform shareholders that it refused to form a similar special committee to review its own merger bid. Why?

Bank also seemingly holds special contempt for hedge fund operator Eminence Capital for trying to play both sides against each other. It says the only reason the hedge fund is supporting the Men's Wearhouse deal is to protect its arbitrage play that would sustain substantial losses if no deal happens. While a number of hedge funds and institutions have taken an interest in the two men's clothiers, Eminence Capital is betting big on Men's Wearhouse, having acquired a near-10% position in the company while holding less than 5% in Jos. A. Bank, but is considering nominating its own candidates for the retailer's board of directors.

Basically, Jos. A. Bank is telling all the players they can go pound salt, but it may be making a move that would target the hedge fund specifically. In addition to standing firm in opposition to Men's Wearhouse, the men's clothier is also rumored to be negotiating a side deal to acquire Eddie Bauer.

Although it wasn't mentioned in yesterday's letter, reports are surfacing it's in negotiations with the outdoor clothing retailer, which is in line with Jos. A. Bank's position all along that it would consider other targets if the Men's Wearhouse deal fell through. With Eddie Bauer owned by Golden Gate Capital, the hedge fund that had committed $2.3 billion to help Bank finance its takeover offer, it's a deal that has the potential to be fulfilled.

Eddie Bauer has grown to about $1 billion in annual sales through approximately 370 stores and would seemingly not trigger any antitrust worries. Although men's retail is highly fragmented, with department store chains like Dillard's, Macy's, Nordstrom, and Saks selling billions of dollars' worth of men's suits annually, if it could seal the acquisition, it would thwart not only the Men's Wearhouse bid, but would deliver a comeuppance to the hedge fund that went from friend to foe while also sidestepping the thorny trade issue altogether.

Of course, Men's Wearhouse pulled a similar stunt after Bank's original bid, saying it was interested in acquiring shoemaker Allen Edmonds to stop the takeover attempt, but that came to naught and it was sold to someone else.

Still, in this game of tit for tat between the two clothiers, the tables are turning so often one could get dizzy from all the spinning. But where it seemed Men's Wearhouse had gained the upper hand just days ago by appealing to large shareholders, momentum may have swung back again to Jos. A. Bank, with its own double reverse maneuver that could leave its two foes trailing well behind.

A retail dressing-down
To learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.

Rich Duprey has no position in any stocks mentioned. The Motley Fool owns shares of Dillard's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information