Suit Wars: Men's Wearhouse versus Jos. A. Bank
(7 pages of text)
On October 9, 2013, Jos. A. Bank Clothiers Inc., a large U.S. retailer of men's tailored and casual clothing, footwear and accessories, made a hostile offer to buy its larger rival Men’s Wearhouse. The latter made a counter-offer on January 6, 2014 in what is known as a Pac-man defence — the prey turned predator. Jos. A. Bank responded by adopting a poison pill, announcing the planned acquisition of Eddie Bauer, an outdoor apparel retailer. What started out as a simple offer had turned into a contest with multiple counter-offers and the deployment of several takeover defences. How should Eminence Capital, a New York-based hedge fund and the largest shareholder in both firms, react? How should each firm respond to the latest offer on their respective tables?
This case can be taught in a corporate finance MBA class and an advanced corporate finance undergraduate class. It can also be used in courses on mergers and acquisitions (especially on the topic of hostile takeovers and merger defences), valuation and corporate strategy. Its objective is for students to learn how to value two companies involved in a hostile takeover situation both individually and combined (merged) using comparables, precedent transactions and a discounted cash flow model.
United States, Large, 2014
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