Hampstead-based Jos. A. Bank Clothiers announced it has commenced an offer to purchase up to $300 million in shares of its common stock at a price of $65 per share - more than $10 higher than its closing price Tuesday - according to a news release issued Wednesday morning.
The offer is contingent on it completing its purchase of Eddie Bauer.
The move is likely in response to Eminence Capital LLC calling Bank's $825 million cash-and-stock acquisition of Eddier Bauer "a poor strategic decision for Jos. A. Bank at a price that is in our view excessive and almost surely destroys shareholder value," in a letter to Bank's Board of Directors Tuesday.
Eminence, a hedge fund which owns a 10 percent share of Men's Wearhouse and about 5 percent of Jos. A. Bank stock, has been pushing for a merger between the two men's clothing retailers. Eminence is suing Bank for rejecting an earlier $1.6 billion takeover bid from Men's Wearhouse.
In the letter issued Tuesday, Eminence stated, "This 'bet the company' strategy on Eddie Bauer - a company which we believe offers minimal product or customer overlap and effectively no credible synergies - defies industrial logic in our opinion. More than 40 percent of Eddie Bauer's sales are to women and virtually all of its products are outside of Jos. A. Bank's core men's tailored clothing segment. Additionally, through this acquisition the company will enter more discretionary and fashion oriented categories in retail apparel, thereby significantly increasing the company's risk profile."
In the news release issued Wednesday, Bank states the tender offer will expire at midnight March 18 unless extended by the company. Tenders of shares must be made on or prior to the expiration of the tender offer and may be withdrawn at any time on or prior to the expiration of the tender offer. The tender offer is subject to a number of terms and conditions described in the Offer to Purchase that is being distributed to stockholders, including the consummation of the previously announced acquisition of Everest Holdings LLC, the parent company of Eddie Bauer.
On the terms and subject to the conditions of the tender offer, stockholders of the company will have the opportunity to tender some or all of their shares at a price of $65 per share. If stockholders properly tender and do not properly withdraw more than an aggregate of up to $300 million in value of shares, all shares tendered will be purchased on a pro rata basis, subject to the conditional tender offer provisions described in the Offer to Purchase that is being distributed to stockholders. Stockholders whose shares are purchased in the tender offer will be paid $65 per share, net in cash, less any applicable withholding taxes and without interest, promptly after the expiration of the tender offer period.
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The company expects to fund the tender offer with cash on hand. None of the company's directors or executive officers or Everest Topco LLC, the owner of Everest and a portfolio company of Golden Gate Capital, will participate in the tender offer.