Jos. A. Bank Clothiers Inc. is buying the parent company of Eddie Bauer in a cash-and-stock deal valued at $825 million that will help strengthen its menswear business and diversify its offerings.
The deal comes as Jos. A. Bank is being pursued by rival Men's Wearhouse Inc.
Men's Wearhouse said Friday in a statement that it will consult with its legal and financial advisers to evaluate its options with regards to Jos. A. Bank. Its shares fell more than 5 percent in trading Friday. Investors may believe the Eddie Bauer deal makes a transaction between Jos. A. Bank and Men's Wearhouse less likely.
Jos. A. Bank said Friday that it struck a deal with Everest Topco LLC to buy Everest Holdings LLC, Eddie Bauer's parent company.
Everest Topco is part of Golden Gate Capital.
Jos. A. Bank said it has been identifying possible acquisition candidates over the past two years and that Eddie Bauer was one of the first buyout targets it considered.
Eddie Bauer, founded in 1920, sells men's and women's clothing and accessories. Its 2013 revenue is estimated to be between $885 million and $895 million. Jos. A. Bank, established in 1905, has 629 stores in 44 states and the District of Columbia.
The two brands will run independently of each other after the transaction is complete.
The combined company is expected to have more than $2.1 billion in revenue in 2014 and adjusted earnings of $3.20 to $3.40 per share. Jos. A. Bank anticipates 2015 revenue of more than $2.2 billion for the combined company, with adjusted earnings in a range of $4.65 to $4.90 per share, including the impact of $25 million of savings.
But even as it announced the deal, Jos. A. Bank said it may end the deal if it receives an acquisition offer for its company that it feels is superior. It would have to pay a termination fee if it accepted a superior offer. But it leaves the door open to a higher offer from Men's Wearhouse.