- Proposal Would Provide Men's Wearhouse Shareholders a
Significant Premium
- $2.3 Billion, All-Cash Transaction Would Create Leading
Men's Apparel Designer, Manufacturer and Retailer in the
U.S.
- Acquisition Would be Immediately and Significantly
Accretive to Jos. A. Bank Earnings
- Golden Gate Capital to Partner with Jos. A.
Bank
In response to inquiries following news reports of discussions with
The Men's Wearhouse, Inc. (NYSE:MW) about a possible business
combination, Jos. A. Bank Clothiers, Inc. (Nasdaq:JOSB) today
confirmed that it has made a non-binding proposal to acquire all of
the outstanding shares of Men's Wearhouse for $48 per share in
cash, representing a total equity value of approximately $2.3
billion, in a negotiated transaction. The proposal represents an
approximate 42% premium to the closing price of Men's Wearhouse
common stock on September 17, 2013, the day before Jos. A. Bank
made the proposal to Men's Wearhouse in a telephone call and
follow-up letter, which is below, from Robert N. Wildrick, Chairman
of the Board of Jos. A. Bank, to Douglas S. Ewert, Chief Executive
Officer of Men's Wearhouse. Men's Wearhouse has advised Jos. A.
Bank that it is reviewing the proposal.
"We are hopeful that Men's Wearhouse's Board will accept our
proposal," said Mr. Wildrick, Chairman of the Board of Jos. A.
Bank. "We believe Men's Wearhouse's shareholders would want their
Board to explore with us the immediate and certain value they would
receive in a transaction. We have always admired Men's Wearhouse
and believe these two great companies, when combined, will create
continued growth and sustainable value for our shareholders,
greatly enhanced benefits for our customers, and exciting
opportunities for our employees."
The transaction is expected to be funded by a combination of
cash on Jos. A. Bank's balance sheet, new equity capital and debt
financing. The new equity will be provided by Golden Gate Capital,
a leading private equity firm. Goldman, Sachs & Co. has
informed Jos. A. Bank that, subject to customary terms and
conditions, it is highly confident that the debt financing can be
obtained in the capital markets.
"Our all-cash proposal would deliver a substantial premium to
Men's Wearhouse shareholders and create, in our view, the leading
men's apparel and sportswear designer, manufacturer and retailer in
the U.S. In addition to capturing significant synergies, we believe
that a combination would bring together our complementary
capabilities to better serve our customers. We are pleased to have
the support and participation of Golden Gate Capital, a leading
investor in the retail space, partnering with us in this
transaction, and look forward to benefitting from their
considerable experience as we grow the combined company," concluded
Mr. Wildrick.
"We are pleased to have been selected by Jos. A. Bank to partner
on this exciting potential combination of the leading brands and
top management teams in men's retailing. We see a natural and
highly complementary fit that creates a great opportunity for these
companies to deliver impressive growth as a result of the
transaction," said Josh Olshansky, Managing Director at Golden Gate
Capital.
Jos. A. Bank believes the proposed transaction will allow Jos.
A. Bank's management to leverage its core competencies and achieve
sustainable growth and value creation for Jos. A. Bank shareholders
while providing a significant premium to Men's Wearhouse
shareholders. The combined company will capitalize on the relative
strengths of each business, offering a larger platform from which
both brands can optimize and expand their real estate footprint,
strengthen their merchandising and sourcing capabilities, and
enhance their multi-channel strategies in a rapidly evolving retail
landscape.
Jos. A. Bank further noted that this transaction would provide
unique benefits to Men's Wearhouse's shareholders due to the
significant overlap in the shareholder composition of the two
companies. In addition to receiving a full cash premium for
their Men's Wearhouse shares, Men's Wearhouse shareholders who are
also shareholders of Jos. A. Bank would have the opportunity to
participate in the value creation resulting from the
combination.
Since the current management team started in November 1999, Jos.
A. Bank has an exceptional track record of generating long-term
growth and shareholder value: its share price has grown at a
compound annual growth rate of 30%, vs. a 1.6% annualized return of
the S&P 500, and ahead of nearly all specialty retail peers.
During the same period, Jos. A. Bank's market capitalization has
appreciated over 4,300% compared to an approximately 25% increase
for the S&P 500.
Goldman, Sachs & Co. and Financo, LLC are serving as
financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP
and Guilfoil Petzall & Shoemake, L.L.C. are serving as legal
advisors to Jos. A. Bank.
Jos. A. Bank's proposal is a preliminary, non-binding indication
of interest to acquire the outstanding shares of Men's Wearhouse,
and was submitted based on the understanding that it is not an
offer that is capable of being accepted, and that there will be no
binding agreement between Jos. A. Bank and Men's Wearhouse or any
commitment or obligation on Jos. A. Bank or Men's Wearhouse with
respect to Jos. A. Bank's proposal or a possible transaction unless
and until a definitive agreement is executed by Jos. A. Bank and
Men's Wearhouse. Jos. A. Bank's proposal is subject to a
number of conditions, including, among others, Jos. A. Bank's
satisfaction with the results of its due diligence review of Men's
Wearhouse in Jos. A. Bank's sole discretion, negotiation and
execution of a mutually satisfactory merger agreement, approval of
a transaction by Jos. A. Bank's Board of Directors, and negotiating
and entering into satisfactory definitive equity and debt financing
agreements.
To Access Further Information About the Proposed
Transaction:
Jos. A. Bank has posted on its website a presentation that
provides further detail surrounding the proposed transaction. Go to
http://phx.corporate-ir.net/phoenix.zhtml?c=113815&p=irol-IRHome
and click "Investor Presentation Regarding Men's Wearhouse
Proposal" icon to access the information.
Text of the September 18, 2013 Letter Sent to the Chief
Executive Officer of Men's Wearhouse:
September 18, 2013
Douglas S. Ewert Chief Executive Officer The Men's Wearhouse,
Inc. 6380 Rogerdale Road Houston, TX 77072
Dear Doug:
It was a pleasure speaking with you today — thank you for taking
my call. We have been in the same industry for many years,
and it was nice to finally meet you, if only by phone. I have
always had a tremendous amount of respect and admiration for your
company, your people, the quality of your brand and the success of
your business model. In many ways, this foundation of respect for
the business and talent within your organization is what led us to
consider and now present you with the proposal I described on the
phone. As we discussed, on behalf of Jos. A. Bank Clothiers,
Inc. ("Jos. A. Bank"), I am pleased to send this letter summarizing
our proposal to acquire The Men's Wearhouse, Inc. (the "Company" or
"Men's Wearhouse") in an all-cash acquisition of 100% of the
Company's outstanding shares (the "Transaction").
We believe that Men's Wearhouse and Jos. A. Bank are ideal
partners — the strategic wisdom of this Transaction is
compelling. By combining our two companies, we can together
create the best men's apparel and sportswear designer, manufacturer
and retailer in the U.S. We believe that a combination would
leverage and enhance Jos. A. Bank's and Men's Wearhouse's
complementary market positioning because our two companies can
better serve all customers with an impressive portfolio of branded
men's apparel and sportswear at various price points. In addition
to capturing operating synergies, the combined company would offer
a larger platform from which we can together optimize and expand
our real estate footprint, strengthen our merchandising and
sourcing capabilities, and enhance our omni-channel strategies in a
rapidly evolving retail landscape.
From a professional standpoint, the management and employees of
both companies should find the combination compelling as
well. The philosophy of Jos. A. Bank has always been to
provide opportunities for the most qualified of our managers and
associates. We also believe in a strong corporate culture where
employees are treated with respect and offered a chance to excel at
their jobs. After all, we are in a service business where our
sales associates and field personnel are ultimately responsible for
the quality and success of our customer interactions. Our approach
to managing our human capital will not change if we combine our two
great companies.
Please find below an outline of our proposal to share with your
Board of Directors:
Proposed Purchase Price: Based on
publicly available information, our knowledge of the Company and
subject to completing due diligence, we are prepared to propose $48
per share in cash for all of the outstanding shares of the Company.
This valuation represents a 42.4% premium for your shareholders
over yesterday's closing price, a 34.6% premium to the 30-day
volume-weighted average per share closing price and a 17.8% premium
to the Company 52-week and 5-year high. Our valuation implies an
8.4x multiple of twelve-month EBITDA ($282 million) as of the
Company's most recent quarter ended August 3, 2013.
Financing: We have spent considerable
time and energy arranging the financing necessary to complete this
Transaction. Funds will be obtained from a combination of
approximately $300 million in cash from Jos. A. Bank, new equity
capital and debt financing. A portion of the purchase price will be
provided by funds managed by Golden Gate Capital, a leading private
equity firm. Golden Gate Capital will purchase $250 million
of Jos. A. Bank equity to facilitate the Transaction. We have
chosen Golden Gate Capital to be our partner because of their
in-depth knowledge of the retail industry, prior success in retail
and consumer transactions, and track record of partnering with
public companies. In addition, Goldman, Sachs & Co. has
informed us that, subject to customary terms and conditions, it is
highly confident that the debt financing for the Transaction can be
obtained in the capital markets. We have engaged both Goldman,
Sachs & Co. and Financo, LLC as our financial advisors on this
Transaction. Additionally, we have retained Skadden, Arps, Slate,
Meagher & Flom LLP and Guilfoil, Petzall & Shoemake, L.L.C.
as our legal counsel.
Due Diligence: In order to submit a
binding proposal, we need to complete normal course due
diligence. This includes meetings with key members of the
Men's Wearhouse management team and access to operational and
financial information as well as management's latest financial
projections. We also anticipate completing customary legal,
accounting and tax diligence. We expect that our due
diligence can be completed in four weeks.
Conditions and Review: The submission of
this proposal has the full support and approval of the Jos. A.
Bank's Board of Directors. We would negotiate the definitive
merger agreement in parallel with our due diligence, with the aim
of approving and executing it shortly after completing our due
diligence. We do not anticipate any significant hurdles to
closing the Transaction promptly after signing a merger
agreement. In addition to due diligence, our proposal is
subject to customary conditions, including, among others,
negotiation and execution of a mutually satisfactory merger
agreement, Board approval, and negotiating and entering into
satisfactory definitive equity and debt financing agreements.
Next Steps: Because of the compelling
value to the Company shareholders represented by our proposal, we
hope you will provide us with access to the non-public information
necessary to confirm our proposal. Jos. A. Bank's leadership team
and I, together with our equity partner and advisors, will make
ourselves available to meet with you to discuss all aspects of our
proposal and answer any questions you may have at your earliest
convenience.
Confidentiality and Timing: We strongly
prefer to conduct our negotiations with you privately and in an
expeditious manner. Therefore, we look forward to your response to
our proposal by October 4, 2013. Let me emphasize that Jos. A.
Bank's and Golden Gate Capital's interest in the Company, the
existence of this letter and its contents are confidential and
should not be disclosed without our prior written
consent.
Contact Information: If you would like to
discuss any aspect of our proposal, please call Jack Levy at
Goldman Sachs or Gilbert Harrison at Financo.
Except for the third sentence of the paragraph of this letter
entitled "Confidentiality and Timing" and this paragraph, this
letter and our proposal constitute only a preliminary, non-binding
indication of interest to acquire the outstanding shares of the
Company, and our proposal is being submitted based on the
understanding that it is not an offer that is capable of being
accepted, and that there will be no binding agreement between us or
any commitment or obligation on Jos. A. Bank or Golden Gate Capital
with respect to our proposal or a possible transaction unless and
until a definitive agreement is executed by Jos. A. Bank and the
Company.
I hope that you and the Men's Wearhouse Board of Directors will
recognize the outstanding merits of our proposal. We look forward
to working together with you to complete this Transaction.
Sincerely,
Robert N. Wildrick Chairman of the Board Jos. A. Bank Clothiers,
Inc.
CC: Jack Levy, Managing Director, Goldman Sachs
Gilbert Harrison, Chairman,
Financo Josh Olshansky,
Managing Director, Head of the Retail Group, Golden Gate
Capital
About Jos. A. Bank
JoS. A. Bank Clothiers, Inc., established in 1905, is one of the
nation's leading designers, manufacturers and retailers of men's
classically-styled tailored and casual clothing, sportswear,
footwear and accessories. The Company sells its full product line
through 623 stores in 44 states and the District of Columbia, a
nationwide catalog and an e-commerce website that can be accessed
at www.josbank.com. The Company is headquartered in Hampstead, Md.,
and its common stock is listed on the NASDAQ Global Select Market
under the symbol "JOSB."
About Golden Gate Capital
Golden Gate Capital is a San Francisco-based private equity
investment firm with over $12 billion of capital under management.
The principals of Golden Gate have a long and successful history of
investing across a wide range of industries and transaction types,
including going-privates, corporate divestitures, and
recapitalizations, as well as debt and public equity investments.
Golden Gate is one of the most active investors in leading brands
in the retail and restaurant sectors. Representative investments
include Payless ShoeSource, Eddie Bauer, California Pizza Kitchen,
Express, Zales, J.Jill, Pacific Sunwear, Coldwater Creek, and On
the Border Mexican Grill and Cantina. For additional information,
visit www.goldengatecap.com
Cautionary Note on Forward-Looking
Statements
This press release contains forward-looking statements and
information about our current and future prospects and our
operations and financial results, which are based on currently
available information. The forward looking statements include
assumptions about our operations, such as cost controls, market
conditions, liquidity and financial condition. These statements
also include assumptions about our proposed acquisition of The
Men's Wearhouse, Inc. ("Men's Wearhouse") through a merger
(including its benefits, results, effects and timing) that may not
be realized. Risks and uncertainties that may affect our business
or future financial results include, among others, risks associated
with the economy, weather, public health and other factors
affecting consumer spending (including negative changes to consumer
confidence and other recessionary pressures), higher energy and
security costs, the successful implementation of our growth
strategy (including our ability to finance our expansion plans),
the mix and pricing of goods sold, the effectiveness and
profitability of new concepts, the market price of key raw
materials (such as wool and cotton), seasonality, merchandise
trends and changing consumer preferences, the effectiveness of our
marketing programs (including compliance with relevant legal
requirements), the availability of suitable lease sites for new
stores, doing business on an international basis, the ability to
source product from our global supplier base, legal and regulatory
matters and other competitive factors. Risks and uncertainties
related to the proposed transaction include, among others: the risk
that Men's Wearhouse's stockholders do not approve the transaction;
potential adverse reactions or changes to business relationships
resulting from the announcement or completion of the transaction;
uncertainties as to the timing of the transaction; competitive
responses to the proposed transaction; the risk that regulatory or
other approvals required for the transaction are not obtained or
are obtained subject to conditions that are not anticipated; the
risk that the other conditions to the closing of the transaction,
which include, among others, negotiation and execution of a
mutually satisfactory merger agreement, approval by each company's
board of directors, and negotiating and entering into satisfactory
definitive equity and debt financing agreements, are not satisfied;
costs and difficulties related to the integration of Men's
Wearhouse's businesses and operations with Jos. A. Bank's business
and operations; the inability to obtain, or delays in obtaining,
cost savings and synergies from the transaction; unexpected costs,
charges or expenses resulting from the transaction; litigation
relating to the transaction; the inability to retain key personnel;
and any changes in general economic and/or industry specific
conditions. Additional factors that could cause future results or
events to differ from those we expect are those risks discussed
under Item 1A, "Risk Factors," in Jos. A. Bank's Annual Report on
Form 10-K for the fiscal year ended February 2, 2013, Jos. A.
Bank's Quarterly Report on Form 10-Q for the quarter ended May 4,
2013, Jos. A. Bank's Quarterly Report on Form 10-Q for the quarter
ended August 3, 2013, Men's Wearhouse's Annual Report on Form 10-K
for the fiscal year ended February 2, 2013, Men's Wearhouse's
Quarterly Report on Form 10-Q for the quarter ended August 3, 2013,
and other reports filed by Jos. A. Bank and Men's Wearhouse with
the Securities and Exchange Commission (SEC). Please read the "Risk
Factors" and other cautionary statements contained in these
filings. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information,
the occurrence of certain events or otherwise. As a result of these
risks and others, actual results could vary significantly from
those anticipated in this press release, and our financial
condition and results of operations could be materially adversely
affected.
Additional Information
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote, proxy or approval. No tender offer for the shares of
Men's Wearhouse has been made at this time.
CONTACT: For Jos. A. Bank - Media:
Thomas Davies/Molly Morse
Kekst and Company
212-521-4873/212-521-4826
thomas-davies@kekst.com
molly-morse@kekst.com
For Jos. A. Bank - Investment Community:
David E. Ullman
EVP/CFO
410-239-5715
For Golden Gate Capital:
Denise DesChenes/Nathaniel Garnick
Sard Verbinnen & Co
212-687-8080
Jenny Gore
415-618-8750
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