The deal would pay Bank's stockholders $65 a share cash, $10 more than Men's Wearhouse initially offered in November, but their gain could mean more job losses in Maryland, where Bank traces its roots to 1905.
The combination of the nation's two biggest men's apparel specialty chains would create a $3.5 billion retail powerhouse with 1,700 stores across the United States and about 23,000 employees that analysts said could compete better with department stores and online sellers.
Men's Wearhouse said it would keep the Jos. A. Bank brand, and Bank terminated its recent agreement to acquire outdoor apparel retailer Eddie Bauer.
The deal ends months of acrimonious tug of war between the two rivals that started when Bank made a surprise $2.3 billion offer to buy Houston-based Men's Wearhouse in September. Spurning Bank's overtures, Men's Wearhouse turned the tables and moved to buy Bank in a series of bids that turned hostile in January.
Leaders of both companies struck much friendlier tones Tuesday after their boards of directors approved the transaction.
Men's Wearhouse CEO Doug Ewert said his chain has "great respect for the Jos. A. Bank management team and is eager to work with Jos. A. Bank's talented employees. Together, Men's Wearhouse and Jos. A. Bank will have increased scale and breadth, and Jos. A. Bank's strong brand and complementary business model will broaden our customer reach."
Bank Chairman Robert N. Wildrick said the retailer's board has been focused on finding a strategic alternative that would maximize value for shareholders.
"The transaction we are announcing today clearly reflects the success of our efforts, providing a substantial premium over any price at which our stock has ever traded," Wildrick said.
Bank's shares rose nearly 4 percent Tuesday, closing at $64.22.
While the higher price is a boon to shareholders, it will bring increased pressure to trim expenses, said Steven Isberg, a finance professor at the University of Baltimore's Merrick School of Business.
"This is a much higher price than originally talked about, and they will not make it back through revenue enhancements," he said.
Isberg said all business processes will be on the table for being eliminated, from back-office operations to the supply chain, including reducing the number of distribution faculties.
"To generate the value they're paying, they're going to have to create some significant cost reductions, more significant than the earlier proposal," he said.
The companies expect expense savings of $100 million to $150 million over three years. The savings are expected to come from more efficient merchandise buying, improved customer service and marketing, and streamlining of corporate functions, they said.
Jos. A. Bank employs about 780 people in Carroll County between its headquarters and three distribution centers, making it the county's fourth-largest employer behind the school system and two hospitals.
It could be months before any decisions are made about the fate of those facilities. Any big changes would be unlikely before the deal closes, which is expected by the third quarter, analysts said.
State economic development officials said Tuesday that it is too early to know how the acquisition might impact Maryland jobs.
"We are hopeful that it will not have an impact and that those jobs will remain in Maryland," said Karen Glenn Hood, a spokeswoman for the state Department of Business and Economic Development. "We just don't have those details."
Consumers probably won't see significant changes.