Jos. A. Bank announced it was buying another clothing retailer this morning — and it isn’t Men’s Wearhouse.
Instead the menswear company said that it would purchase the outdoor clothing company Eddie Bauer for $825 million from Golden Gate Capital, a private equity firm that bought the company out of bankruptcy in 2009. The purchase will be made with $545 million in cash and the remaining in Jos. A. Bank stock.
The company said that “Eddie Bauer has long been of interest to Jos. A. Bank” and that the purchase “would enable the Company to leverage its core competencies and deliver immediate and long-term value to its shareholders.” Based on Eddie Bauer’s 2014 earnings, Jos. A. Bank could pay an additional $50 million.
The Maryland-based menswear retailer has been in a seemingly endless battle with its rival Men’s Wearhouse over which one will buy the other.
Earlier this month, Jos A. Bank’s board of directors wrote a letter to Men’s Wearhouse saying that its earlier offer for the company “substantially undervalues” Jos. A. Bank and questioned “the credibility of Men’s Wearhouse’s actions in pursuing its offer for Jos. A. Bank.” Men’s Warehouse had offered to buy Jos. A. Bank for $57.40 a share in January; it first offered to buy its smaller rival for $55 a share in November, or $1.5 billion. In October, Jos. A. Bank made a $48 per share or $2.3 billion offer for Men’s Wearhouse.
Jos. A. Bank said this morning that it had first looked at buying Eddie Bauer in early 2012 and several times after. Jos. A. Bank said that it approached Eddie Bauer again after its September offer for Men’s Wearhouse was rejected.
Jos. A. Bank’s chairman said in a statement that the company had “preserved the ability to enter into an alternative transaction that creates greater value for our shareholders should such a transaction be proposed,” meaning that the Eddie Bauer deal does not close the door on a bigger Men’s Wearhouse deal, either a sale or an acquisition.
To avoid diluting stockholders, Jos. A. Bank also announced that it would buy back 4.6 million of its shares for $300 million. The company’s stock closed yesterday at $54.92.