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Men's Wearhouse Raises Takeover Bid for Jos. A. Bank, With Some Strings

By Associated Press - Feb 24, 2014 at 10:07AM

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The new offer, which is set to expire on March 12, is conditioned on Jos. A. Bank ending its deal for Eddie Bauer.

FREMONT, Calif. (AP) -- Men's Wearhouse is stepping up its pursuit of Jos. A. Bank Clothiers, boosting the takeover offer for its rival by 10%, to about $1.78 billion.

The move comes 10 days after Jos. A Bank announced that it was planning to buy the parent company of Eddie Bauer in a cash-and-stock deal valued at $825 million. But at the time Jos. A. Bank left the door open, saying that it may end the Eddie Bauer deal if it receives an acquisition offer that is superior.

Men's Wearhouse said Monday it's now offering $63.50 per share for Jos. A. Bank, up from its prior $57.50 per share bid. The new offer, which is set to expire on March 12, is conditioned on Jos. A. Bank ending its deal for Eddie Bauer. Other conditions include Jos. A. Bank's directors redeeming or invalidating the shareholder rights plan that's in place.

Men's Wearhouse said it may even raise the bid further, to $65 per share, if it is able to examine Jos. A. Bank's books and be given access to the company's management team.

Men's Wearhouse President and CEO Doug Ewert said in a statement that it would even be willing to talk about offering Jos. A. Bank shareholders the opportunity to choose to receive Men's Wearhouse stock for part of its proposal.

Ewert said there's been "extensive dialogue" with both companies' shareholders over the past several months and that there's "widespread support" for the potential transaction.

Jos. A. Bank did not immediately respond to an email seeking comment.

But even as it raised its offer, Men's Wearhouse announced Monday that it filed a lawsuit in Delaware against Jos. A. Bank and its board and the companies involved in the Eddie Bauer transaction. The lawsuit alleges Jos. A. Bank's board breached its fiduciary duties by adopting "unreasonable, shareholder unfriendly and illegal defensive measures" designed to thwart Men's Wearhouse's offer, prevent a change of control, fill the board with allies, interfere with the upcoming vote for two board members and entrench the existing board.

Men's Wearhouse previously announced that it planned to nominate two independent director candidates for Jos. A. Bank's board at its annual meeting.

Men's Wearhouse said that it wants the court to find that Jos. A. Bank's directors breached their fiduciary duties. It also wants the court to order Jos. A. Bank's board to rescind its shareholder rights plan and provide an order enjoining the companies from moving forward with the Eddie Bauer deal.

The back-and-forth between Men's Wearhouse and Jos. A. Bank started in October, when Jos. A. Bank offered to buy its larger rival for $2.3 billion. Men's Wearhouse scoffed at that offer, and turned the tables, offering to buy its rival for $1.54 billion. But after Hampstead, Md.-based Jos. A Bank turned down that overture, Men's Wearhouse increased its bid to $1.6 billion.

Men's Wearhouse and Jos. A. Banks cater to different customers, but offer similar types of clothing: suits and sport coats.

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