Men’s Wearhouse and Jos A Bank ends months-long standoff with nondisclosure accord
Mar 03, 2014 02:43 PM EST
A report by The New York Times' the DealBook said that Men's Wearhouse announced what seems to be the end of a merger standoff with Jos A Bank Clothiers with a nondisclosure agreement. A nondisclosure agreement or NDA as defined by Investopedia is a legal contract of which its details are kept out of the public except for the parties involved in the agreement. DealBook said that Jos A Bank had submitted a proposal of the merger agreement to Men's Wearhouse as part of the accord.
The standoff between the two men's retail companies had began with an unsolicited bid to acquire the much-bigger Men's Wearhouse by Jos A Bank. The bid, said Dealbook, ultimately backfired on the company when the latter launched a hostile takeover of Jos A Bank.
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To avoid getting snapped up by Men's Wearhouse, Jos A Bank courted and got an agreement to buy outdoor goods retailer Eddie Bauer with an $825 million acquisition deal last month, DealBook said. Moreover, the Wall Street Journal said Jos A Bank sweetened the deal with Eddie Bauer with a share repurchase agreement worth $300 million should the deal closes. According to a source who was briefed on the Eddie Bauer takeover strategy by Jos A Bank, the latter resorted to buying the outdoor goods company for Men's Wearhouse in order for the bigger men's retailer to increase its buyout offer.
At the moment, Men's Wearhouse's current offer is $63.50 per share of Jos A Bank, which was deemed too low by the latter. However, Men's Wearhouse has voiced out the possibility of increasing its $1.8 billion offer to about $65 per share. With the NDA in place, DealBook said that the two companies will be able to exchange sensitive company information that would allow them to work out a favorable merger agreement.
On the other hand, the big loser in the merger saga would be Eddie Bauer, whose own merger deal with Jos A Bank would fall through should the latter and Men's Wearhouse finalize their own consolidation, WSJ said.