Men's Wearhouse files suit against rival Jos A Bank

The battle to control America's discount suit market erupted into litigation on Monday, after Men's Wearhouse filed a lawsuit against the directors of smaller rival Jos A Bank and launched a new takeover offer for the company.

In a filing, Men's Wearhouse accused the retailer's board of failing to act in the best interest of shareholders by "adopting a series of unreasonable, shareholder-unfriendly and illegal defensive measures".

The complaint follows Jos A Bank's move, two weeks ago, to buy sportswear brand Eddie Bauer for $825m - a move that Men's Wearhouse criticised as an attempt to thwart its own takeover bid.

In addition to the filings, Men's Wearhouse reanimated its efforts to buy Jos A Bank on Monday, increasing its takeover offer by 10 per cent to $63.50 a share, valuing it at $1.78bn.

The company said it would consider raising its offer to $65 if given the opportunity to conduct limited due diligence. The new offer would be conditional on the Eddie Bauer deal being abandoned.

News of the offer sent shares in Men's Wearhouse up 6 per cent to $45.11. Jos A Bank shares rose 8 per cent to $55.05 in morning trading.

The filing and the takeover offer follow months of fighting between the two companies that has seen each bid to take control of the other. Relations between the respective managements have deteriorated with each attacking the other's claim to be the right leadership for an enlarged company.

Doug Ewert, Men's Wearhouse's chief executive, said: "We have had extensive dialogue with shareholders of both companies over the last several months and have received widespread support for this transaction". He added that his company was prepared to add stock to its offer to allow Jos A Bank shareholders to "participate in the upside of a combination".

The management of Men's Wearhouse and Jos A Bank have both outlined the industrial logic for joining the two companies. Both have rejected the other's attentions, however, in a fight that has perplexed retail analysts.

Analysts at Stifel estimated that a combined company, which would dominate the US discount menswear market, would have annual cost savings of $100m-$150m, driven by purchasing efficiencies, reduced backroom functions and lower marketing costs.

Jos A Bank was not immediately available to comment.

© The Financial Times Limited 2014. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation