Oct. 9 - Men's Wearhouse is playing hard to get, saying Joseph A. Bank's bid undervalues its growth prospects and could raise antitrust issues. Fred Katayama reports.
TV AND WEB RESTRICTIONS**MUST COURTESY YOUTUBE/JOS. A. BANK**~ Men's Wearhouse rejected its smaller suitor. Its archrival known for its "Buy One, Get Three Free" suits, Jos. A. Bank, offered a big premium for Men's Wearhouse. But the apparel chain is playing hard-to-get, saying the $2.3 billion cash bid "significantly undervalues" its growth prospects and could raise antitrust issues. A combination would create a network of more than 1,700 stores nationwide and Canada. Century-old Jos. A. Bank is trying to take advantage of the turmoil that struck its rival. In June, Men's fired founder George Zimmer as chairman after he tried to take the retailer private. It cut its full year earnings forecast last month. Stifel analyst Richard Jaffe likes Jos. A. Bank's bid. He says, "Jos. A. Bank would benefit from Men's Wearhouse's strong tuxedo rental business, a business Jos. A. Bank has tried to enter. Jos. A. Bank could also benefit from the more trend-right, branded merchandise offerings, including Men's Wearhouse's recent Joseph Abboud acquisition." Investors want the bid to go through. Both Men's Wearhouse and Jos. A. Bank rocketed higher on the news. Usually, shares of an acquirer tend to fall on such announcements. Since the end of 2007, Jos. A. Bank has more than doubled while Men's Wearhouse has risen 31 percent. Jos. A. Bank's move comes at a time when sales have begun to slow for menswear retailers after two years of strong growth amid the discounting, the popularity of slim-fit suits, and an improving jobs market.