The rocky courtship between suit sellers Men’s Wearhouse and Jos. A. Bank Clothiers Inc. has finally produced a marriage.
Men’s Wearhouse Inc. agreed on Tuesday to buy its smaller rival for $1.8 billion, ending a lengthy bidding war.
It all started a year ago, when the friendly bearded guy from Men’s Wearhouse commercials, it’s founder, George Zimmer, started thinking about taking the company private.
The former chief executive stepped down in 2011 to become chairman of the company’s board, but had trouble handing over the reigns to his chosen successor, Douglas S. Ewert.
Zimmer was ousted by the board and responded in an open letter to the company last June: “To justify their actions, they now have tried to portray me as an obstinate former CEO, determined to regain absolute control by pushing a going private transaction for my own personal benefit and ego. Nothing could be further from the truth,” Zimmer wrote.
Jos. A Bank saw an opportunity in the infighting. The company offered $2.3 billion to buy its larger rival, a brazen move given that Men’s Wearhouse hadn’t signaled an interest in selling. Men’s Wearhouse rejected the offer.
Men’s Wearhouse then turned the tables on Jos. A. Bank, offering to buy it for $1.5 billion. Robert N. Wildrick, chairman of Jos. A Bank, played coy, first signaling he was open to the merger then rejecting the offer as inadequate.
Then things got hostile. In early January, Men’s Wearhouse raised its bid to $1.6 billion and said it would nominate two members to the Jos. A. Bank board of directors. On Valentine’s Day, Jos. A Bank went after outdoor retailer Eddie Bauer, which it agreed to buy for just under $1 billion.
Men’s Wearhouse then sued to block the deal.
Yesterday, the two finally got together when Jos. A Bank agreed to terminate its agreement to buy Eddie Bauer and go home with Men’s Wearhouse to the tune of $65 per share, or $1.8 billion.
Ronald Goodstein, an associate professor of marketing at Georgetown University’s McDonough School of Business, told the Washington Post that the merger will allow cost-cutting and create a “mega-brand.” Under the terms of the deal, Jos. A Bank will keep its name. The combined company will be the fourth largest U.S. men’s apparel retailer with projected sales of approximately $3.5 billion, according to a press release from the two companies.
As for the company’s jilted founder? The original purveyor of the $25 polyester sports coat has moved on. “I’m not really thinking about being involved in the Men’s Wearhouse anymore,” Zimmer told the New York Times.