Men's Wearhouse Inc. mounted a hostile $1.61 billion bid Monday for Jos. A. Bank Clothiers Inc. in an attempt to break the resistance of its smaller rival and pacify investors hungry for a merger of the suit retailers.
But analysts said the bid of $57.50 per share, at a 6 percent premium to Jos. A. Bank's closing price on Friday, was likely to nudge the two companies closer to the creation of a combined chain selling suits and renting tuxedos from 1,700 stores in North America.
Men's Wearhouse shares rose $1.09 to close at $51.68. Jos. A. Bank shares rose $2.46 to close at $56.87.
Men's Wearhouse has been under pressure from activist shareholders to capture a bigger share of a market where growth prospects are limited and retailers have traditionally offered big discounts to compete with department stores.
By upping its offer and taking it to every Jos. A. Bank shareholder, the company is raising the stakes in a protracted battle between rivals intent on playing the lead role in such a combined company.
The offer, higher than its previous bid of $55 per share, will also test the "poison pill" anti-takeover defense adopted by Jos. A. Bank on Friday.
Men's Wearhouse chief executive Doug Ewert said the company would prefer to work with Jos. A. Bank, but would pursue its target regardless.
Men's Wearhouse also said it would nominate two independent directors for election to Jos. A. Bank's board.
Jos. A. Bank said in a statement it would review the latest offer and make a recommendation to shareholders on or before Jan. 17.
Fremont, Calif.-based Men's Wearhouse was founded 40 years ago by George Zimmer, known to U.S. television audiences for his advertising catchphrase, "You're going to like the way you look -- I guarantee it." Zimmer was ousted by the board in June.
Jos. A. Bank triggered the shareholder battle with a $2.3 billion bid for Men's Wearhouse last year that was swiftly rebuffed by its larger rival.