Oh, the wacky world of men's apparel retailing. It's made for some entertaining reading of late.
First, there were soap opera-like goings on in the Men's Wearhouse boardroom where the founder and "voice" of the company found himself getting the boot. Recriminations, played out in the public eye, went back and forth.
Next, Jos. A. Bank, Men's Wearhouse's smaller rival, made an unsolicited bid to acquire the chain. Analysts and investors liked the offer — and the stock price of both companies shot higher — but the board at Men's Wearhouse didn't take long before flatly rejecting it.
A portion of a statement by Bill Sechrest, lead director of Men's Wearhouse, published on the Bloomberg News site, read, "Jos. A. Bank's unsolicited proposal is opportunistic, subject to unacceptable risks and contingencies, and would deprive our shareholders of the value inherent in Men's Wearhouse for inadequate consideration."
Understandably disappointed by the rejection, Jos. A. Bank's board replied, "We find the response by Men's Wearhouse to our all-cash $48 per share proposal inexplicable."
Jos. A. Bank contends it has made an offer higher on a per share basis than Men's Wearhouse has reached in the past five years. While that may be true, others including Richard Jaffe, retail analyst at Stiffel, believe the offer is too low. Mr. Jaffe told USA Today that he puts the value of Men's Wearhouse at $52 per share.
In a unique twist, Jos. A. Bank board chairman Robert Wildrick told The Wall Street Journal that if Men's Wearhouse did not want to be acquired for the $48 per share price, than it should offer the same deal for a merger with his company.
Aside from Men's Wearhouse's snub, analysts see a lot to like in the merger of the two companies.
"Any time you take two companies in a similar business, there should be cost savings in the supply chain,'' James Gellert, CEO of Rapid Ratings, told USA Today." This has the makings of a reasonable deal."
Jos. A. Bank, which pushes a steady stream of BOGO offers, has more than 600 stores and sells online. Men's Wearhouse, which takes more of an EDLP approach, has over 1,100 units operating under the Men's Wearhouse, Moore and K&G banners.
Which do you think is the most likely scenario?