Men's Wearhouse Adopts Rights Plan After Rejecting JoS. A. Bank's Offer

(RTTNews) - The Men's Wearhouse (MW) announced that its board of directors has adopted a limited duration shareholder rights plan and has declared a dividend of one right on each share of the company's common stock outstanding at 5:00 pm., on October 21.

The Rights Plan was adopted following the company's rejection of the unsolicited proposal by retailer JoS. A. Bank Clothiers, Inc. (JOSB) to acquire Men's Wearhouse for $48.00 per share in cash, representing a total equity value of about $2.3 billion.

On Wednesday morning, Men's Wearhouse rejected the proposal stating that it significantly undervalues it, and not in the best interests of the company or its shareholders.

The rights generally will become exercisable and allow holders to acquire the company's common stock at a discounted price, if a person or group acquires beneficial ownership of 10 percent or more of Men's Wearhouse common stock, in a transaction not approved by the company's board.

According to the company, the Rights Plan is not intended to prevent its acquisition on terms that the board considers favorable and fair to, and in the best interests of all shareholders.

The Rights Plan will expire on September 30, 2014 unless earlier redeemed, exchanged or terminated by the company.

In addition, the board has amended and restated the company's bylaws and adopted a two-thirds voting standard for approval of shareholder amendments to the bylaws and revised the advance notice provision to require earlier advance notice of intended shareholder nominations of directors.

Separately, Jos. A. Bank urged shareholders of Men's Wearhouse to voice their support for its $48 per share cash proposal.

"The formulaic, knee-jerk rejection by Men's Wearhouse, and their refusal to even discuss our proposal, do not serve the interests of their shareholders or their customers," the company said.

The firm had proposed a 42 percent premium to the closing price of Men's Wearhouse's common stock on the day before it made the acquisition proposal, and said its price is significantly greater than the highest price at which Men's Wearhouse's stock has traded over the last five years.

Jos. A. Bank also said it is ready for talks with the board of Men's Wearhouse. Its proposal is backed by Golden Gate Capital, who is prepared to invest about $250 million in the combined company.

Men's Wearhouse shares closed Wednesday's regular trading at $45.03 on the NYSE. JOSB ended at $44.33 on the Nasdaq.