Takeover talks have been ongoing between Men's Wearhouse (NYSE:TLRD) and Jos A. Bank (UNKNOWN:JOSB.DL) for some time now, but it now seems as if the saga has come to an end with Men's Wearhouse agreeing to buy Jos A. Bank. Together, the combined company will become one of the biggest apparel corporations in the US and it can look forward to a range of synergy benefits. Investors have applauded the deal and sent both stocks up. What's in store for the tie-up?

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Some background
The saga of the Men's Wearhouse and Jos A. Bank merger has been ongoing for some time now, as it started soon after the Men's Wearhouse board of directors ousted founder George Zimmer. The first offer came last fall when Jos A. Bank offered to buy its larger competitor for some $2.3 billion. Men's Wearhouse turned down the offer and shot back an offer for $1.5 billion which Jos. A. Bank in turn rejected, which sparked a volley of bids and counter-bids between the chains.

Eminence Capital, a hedge fund with large stakes in both companies, stepped up the pressure on Men's Wearhouse and Jos A. Bank management to come to an agreement on a merger. In March, Men's Wearhouse said that it would consider offering $65 per share, or $1.8 billion in total, if Jos A. Bank opened up its books. Now, the deal has finally been closed, with closure expected in the third quarter of this year.

Now what?
While the $65 per share offered by Men's Wearhouse represents a premium of only a few percentage points to Jos A. Bank's most recent close, it comes as a steep premium of 56% to the price on October 8, the date when the takeover talks started. As such, it seems as if Jos A. Bank shareholders will see the greatest benefits from the deal, but the market seems like it has rewarded Men's Wearhouse as well.

Under the terms of the deal, Jos A. Bank will retain its name so it will not need to rebrand itself. Together, the company will operate some 1,700 stores in the US with a workforce of around 23,000 employees, which will make it the fourth-largest clothing chain in the country. The expected synergy benefits over the first three years range between $100 million and $150 million. Aside from this, commentators believe that the companies have much to learn from each other and that the tie-up will allow them to offer greater value to consumers.

After recently delivering a wider-than-expected loss, Men's Wearhouse may view consolidation as a way to more effectively compete with larger rivals such as Macy's (NYSE:M). Macy's has been holding up surprisingly well in a difficult spending environment, as its fourth-quarter report beat the consensus and showed EPS up around 12% year-over-year. Some see the company as the mid-tier winner over the holiday period, as its 2.3% increase in same-store sales seems to have outpaced most rivals in the industry.

The bottom line
Finally, the takeover saga of Men's Wearhouse and Jos A. Bank has come to an end. After beginning in October last year, the volley of bids and counterbids has terminated in a deal in which Men's Wearhouse will acquire Jos A. Bank for around $1.8 billion. Commentators, as well as market sentiment, view the deal as a boon for both companies. Aside from the synergy-related benefits it offers, the deal should allow the combined company to improve its competitive position. Shareholders might look forward to increased value in the years to come as the benefits of the tie-up become clearer.