In less than 12 hours, Hampstead-based men's clothing store Jos. A. Bank offered a proposal to acquire Men's Wearhouse, which was promptly rejected.
Jos. A. Bank proposed a $2.3 billion acquisition, which would equate to about $48 per share in cash, according to a release from Jos. A. Bank.
In a morning statement, Jos. A. Bank said a combined company would capitalize on the relative strengths of each business. According to an investor presentation from Oct. 9, Men's Wearhouse has 1,143 stores while Jos. A. Bank has 602 stores nationwide.
The average Jos. A. Bank customer ranges between 35 and 55 years old, and has an annual household income of between $100,000 and $125,000. The Men's Wearhouse customer is "likely lower income," compared to Jos. A. Bank, according to the presentation, and tends to be between 25 and 55 years old.
In a statement, Men's Wearhouse announced its Board of Directors rejected the proposal from Jos. A. Bank.
"We believe Jos. A. Bank's unsolicited proposal is opportunistic, subject to unacceptable risks and contingencies, and would deprive our shareholders of the value inherent in Men's Wearhouse for inadequate consideration," said Bill Sechrest, lead director of the board, in the prepared statement.
The proposed purchase price was at a 17.8-percent premium to Men's Wearhouse's 52-week, and 5-year high per share.
In a statement, Men's Wearhouse said the company has an industry-leading market position and a proven track record of creating value for shareholders.
A representative from Men's Wearhouse wrote in a statement that the proposal was a "highly opportunistic" attempt to exploit dislocation in the stock price in order to deprive shareholders of the intrinsic value of their investment.
The second-quarter performance of Men's Wearhouse led to a 12 percent decline in Men's Wearhouse's (NYSE: MW) stock price, which jumped 9.8 points on the New York Stock Exchange to $45.04, as of 2:15 p.m. Wednesday
It closed Tuesday at $35.24, and suffered its lowest stock price in Dec. 6 at $27.42.
Comparatively, Jos. A. Bank's (NYSE: JOSB) lowest stock price was Jan. 28 with $37.31, according to the New York Stock Exchange. Its high peaked Oct. 17 at $50.65, and as of 2:15 p.m. was at $44.63.
According to graphs on the volumes of shares, the clothing store peaked in the morning when it announced the interest to buy Men's Wearhouse, but fell steadily in the afternoon, when Men's Wearhouse made its announcement.
"Men's Wearhouse has more than [twice] the sales of Jos. A. Bank, its next largest competitor," according to the company's statement.
Both Men's Wearhouse and Jos. A. Bank did not return phone calls for comment.