Jos. A. Bank Clothiers refused to roll over and play dead after the recent hostile takeover offer from Men's Wearhouse.

On Friday, the Hampstead-based retailer announced that its board recommends shareholders reject a $1.61 billion acquisition offer from Men's Wearhouse, the latest move in a tug of war kicked off when Bank tried to buy its larger rival in October.


Bank said in a statement that its board concluded the $57.50-a-share offer "is inadequate from a financial point of view and not in the best interest of Jos. A. Bank's stockholders." Financial adviser Goldman Sachs agreed that the offer was too low, Bank said.

California-based Men's Wearhouse, criticizing Bank for refusing to negotiate, called on Bank's independent directors to form a special committee to "objectively evaluate our offer."

"Given that the Jos. A. Bank Board has publicly acknowledged the compelling strategic logic of this transaction, we think Jos. A. Bank shareholders should question why their Board is refusing to negotiate with us to reach an agreement that will deliver to them significant value," Men's Wearhouse said in a statement.

Steven Isberg, an associate professor of finance at the University of Baltimore's Merrick School of Business, called the exchange "very typical posturing in a hostile takeover bid."

It's not surprising that Bank gave a thumbs down to the deal, said Karyl Leggio, dean of the Sellinger School of Business and Management at Loyola University Maryland. For one thing, it could prompt a better offer. Beyond that, Bank leaders have a reason to avoid being bought out.

"Jos. A. Bank management wants to remain in charge," she said. "That's why they tried to acquire Men's Wearhouse in the beginning."

Bank's stock closed at $56.49 a share Friday, up 37 cents, before the company made its announcement about the offer. By waiting until after the markets closed, Bank bought itself three days before trading restarts after the Martin Luther King Jr. holiday, Leggio said.

"My guess is Jos. A Bank is on the phone with their big shareholders all weekend long to try to keep them from tendering their shares," she said.

The Men's Wearhouse offer gives Bank shareholders until March 28 to tender their shares for its cash offer.

One major shareholder is all for the deal. Eminence Capital, a New York hedge fund, pressured Men's Wearhouse to negotiate with Bank when the shoe was on the other foot and is now pressing Bank to make the merger happen.

Eminence, which owns about 5 percent of Bank shares and about 10 percent of Men's Wearhouse shares, filed a request for an injunction in a Delaware court to try to stop Bank from seeking to acquire other firms and force it to negotiate. Bank said Friday that it is asking the Court of Chancery to dismiss the case.

Eminence declined to comment Friday.

Leggio figures Men's Wearhouse likely will prevail in its takeover bid, possibly after sweetening its offer. That wouldn't be a happy scenario for the region, because it could mean job cuts and would almost certainly result in the loss of the headquarters, she said.

The continuing battle is a departure from the friendly acquisition deals the region has seen in recent years, Isberg said.


"You had one company bid for another; now you've got the reverse," he said. "Many people believe this will keep going back and forth until someone agrees. Whether that will happen in the near future, it's hard to say. Neither company really wants to be the acquired company in this transaction, that much is clear."