Jos. A Bank Clothiers Inc. (Nasdaq: JOSB), which has been in a buying tussle with Men's Wearhouse Inc. (NYSE: MW) since October, is buying private equity-backed retailer Eddie Bauer for $825 million.
Eddie Bauer sells active, outdoor and lifestyle brand clothing for men and women. The transaction adds new categories, such as women's apparel and footwear, to Jos. A. Bank's offerings, which consist of men's suits, casual wear, sportswear, footwear and accessories. Although the companies will operate separately, Jos. A. Bank expects they will both benefit from about $25 million in process and infrastructure synergies.
Hampstead, Md.-based Jos. A. Bank is buying Eddie Bauer parent company Everest Holdings LLC from Everest Topco LLC, which is owned by San Francisco private equity firm Golden Gate Capital.
Jos. A. Bank has spent the past two years looking for and reviewing potential acquisition candidates. The company first contacted Golden Gate about buying Eddie Bauer in early 2012, but Golden Gate was not ready to consider a deal at that time, Jos. A. Bank says in a statement.
The buyer retains the right to cancel its acquisition agreement if it receives an offer to be acquired that it is willing to accept. The company's right to terminate its agreement in order to accept a superior proposal is subject to payment of a fee of less than 3 percent of Jos. A. Bank's equity value based on Men's Wearhouse's current offer price. Jos. A. Bank has been going back and forth with Men's Wearhouse for months, raising its offers for the competing retailer, and receiving offers from Men's Wearhouse to be acquired. Men's Wearhouse rejected a $2.3 billion bidfrom Jos. A. Bank in October, and Jos. A. Bank rejected a $1.54 billion acquisition offer from Men's Wearhouse in November.
The purchase price consists of $564 million in cash and about 4.7 million new shares of Jos. A. Bank stock. After the deal closes, Everst Topco is expected to own 16.6 percent of Jos. A. Bank. The deal will be financed through the cash, stock issuance and debt financing provided by Goldman Sachs & Co.
Goldman and Financo LLC are serving as Jos. A Bank's financial advisers, while Skadden Arps Slate Meagher & Flom LLP is providing legal advice. Kirkland & Ellis LLP is Golden Gate's legal counsel.
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