Jos. A. Bank Sends Letter To Men's Wearhouse

(RTTNews) - Jos. A. Bank Clothiers, Inc. (JOSB) said it has sent a letter to Douglas S. Ewert, President and Chief Executive Officer of The Men's Wearhouse, Inc., (MW) in response to Ewert's letter dated January 30, 2014, which had urged them to form a special committee of independent directors to re-consider Men's Wearhouse's $1.6 billion offer and the JOSB Board's decision to reject it.

Jos. A. Bank said that it continues to believe that the offer to acquire Jos. A. Bank substantially undervalues the Company and that its proposal is not in the best interests of the company stockholders. Accordingly, Jos. A Bank said it sees no benefit in commencing negotiations with Men's Wearhouse.

Jos. A. Bank pointed out that Men's Wearhouse made a number of inaccurate and misleading claims in its letter and these statements call into question the credibility of Men's Wearhouse's actions in pursuing its offer for Jos. A. Bank.

The company stated that in opposing its proposal in the fall to acquire Men's Wearhouse, Ewert had very clearly mentioned that a combination "raises significant antitrust concerns."

Since making your offer on November 26, 2013 for Jos. A. Bank, you have not updated your views regarding the antitrust risk. Should our stockholders assume that when Men's Wearhouse made its offer it still believed a combination raised "significant antitrust concerns"? If not, Men's Wearhouse has yet to explain why the antitrust concerns it raised just seven weeks before its offer for Jos. A. Bank do not apply to its offer for Jos. A. Bank. Your silence has been misleading to both Jos. A. Bank and Men's Wearhouse stockholders. We believe you have a duty to inform investors whether, based on your knowledge, your offer can be approved by the Federal Trade Commission, the company stated.

The letter also read that Jos. A. Bank was surprised about some of the actions that Ewert accused them of taking because they are similar to what Men's Wearhouse did when considering its acquisition proposal. Since the company assumes you believe your own conduct was appropriate, Jos. A. Bank said it has to question the credibility of the claims.

Jos. A. Bank stated that since Men's Wearhouse failed to explain its flip flop about antitrust, there is a lack of candor in its failure to explain why it had criticized Jos. A. Bank for something that the Men's Wearhouse Board did as well.

If one reviews the behavior of Men's Wearhouse since it first received Jos. A. Bank's proposal in October 2013, we think there are real questions about whether your Board, together with your largest stockholder, the hedge fund Eminence Capital, are pursuing an acquisition of Jos. A. Bank for reasons that are very different from what is in the interests of our stockholders.

The facts raise questions about whether your directors and management made the offer for Jos. A. Bank in order to avoid a proxy fight by Eminence that, if successful, threatened the Board's status and management's jobs. When Men's Wearhouse rejected our acquisition proposal, Eminence threatened to wage a proxy fight against Men's Wearhouse. Facing this pressure, Men's Wearhouse did an abrupt about face and launched its offer for Jos. A. Bank. Then, shortly after Men's Wearhouse made its offer, Eminence dropped its proxy fight threat against Men's Wearhouse's directors, the letter stated.

The Bank said that in the case of Eminence, it believes it has been arguing first for Jos. A. Bank's acquisition of Men's Wearhouse and then Men's Wearhouse's acquisition of Jos. A. Bank in order to avoid a potentially large loss on its high-risk arbitrage play -- buying Men's Wearhouse shares betting that a deal would happen. If no deal happens and if the trading price of Men's Wearhouse's shares drop, Eminence could incur substantial losses for its investors on the Men's Wearhouse shares it recently acquired.

Given the fact that the Men's Wearhouse's tender offer does not expire until March 28, 2014, and given the uncertain delay involved in responding to the second request from the FTC, our Board's thoughtful process is causing Men's Wearhouse no delay whatsoever, Jos. A. Bank said.