Jos. A. Bank To purchase Eddie Bauer For $825 Million
Feb 14 (Reuters) – Men’s clothes retailer Jos. A. Bank Clothiers Inc, the goal of an unwelcome bid from rival Males’s Wearhouse Inc, said it might buy outdoor clothes retailer Eddie Bauer for $825 million in its latest effort to remain impartial.
Jos. A. Financial institution said it had reviewed each a doable acquisition of, and sale to, Males’s Wearhouse however had decided that the Eddie Bauer deal and a share buyback that it also announced on Friday would supply greatest value for shareholders.
“(Jos. A. Bank) is doing every little thing to secure its independence,” said Jerry Reisman, an M&A knowledgeable at legislation agency Reisman Peirez Reisman and Capobianco LLP.
The company can pay $564 million in money and concern about four.7 million new shares at $56 every to an affiliate of Golden Gate Capital, the last word guardian of Eddie Bauer.
The personal fairness firm will find yourself controlling about sixteen.6 % of Jos. A. Financial institution and have the correct to call two directors.
Golden Gate additionally has the appropriate to a $50 million money earn-out primarily based on this yr’s outcomes at Eddie Bauer, a retailer of sportswear, outerwear, gear and equipment for out of doors actions.
The personal fairness agency purchased Eddie Bauer, based in Seattle in 1920, for $286 million at a bankruptcy public sale in 2009.
Jos. A. Bank stated it will start a $300 million tender supply immediately after the deal closes to purchase back four.6 million shares at $65 each, a premium of 18.Four % to the inventory’s close of $54.92 on Thursday.
Jos A. Bank shares have run up 24 % to its Thursday close since the corporate first bid $2.3 billion for Men’s Wearhouse last October.
The larger retailer spurned the provide and later turned the tables by offering to purchase Jos. A. Bank for $1.5 billion.
Males’s Wearhouse sweetened its offer to $1.6 billion final month but Jos. A Bank rejected it once more.
Reisman referred to as the buyback “a wise transfer” as the repurchase would successfully negate the dilution to Jos. A. Financial institution’s shares arising from the brand new shares issued to Golden Gate.
Reisman, however, said the corporate would possibly want to lift extra debt to purchase again shares.
Jos. A. Bank expects to finance the deal by a mix of cash and dedicated debt financing provided by Goldman Sachs & Co.
The company reported money and cash equivalents and short-term investments of about $340 million and no lengthy-term debt, as of Nov. 2.
Jos. A. Financial institution mentioned on Friday it had the correct to drop its provide for Eddie Bauer if it bought a superior proposal.
Males’s Wearhouse mentioned it would consider its options regarding Jos. A. Bank. The company’s buyout tie dye team shirts provide is scheduled tie dye team shirts to expire on March 28.
Jos. A. Bank expects the Eddie Bauer deal, which would create an organization with annual revenue of more than $2.1 billion, to instantly add to earnings.
Eddie Bauer estimated its 2013 income to be between $885 million and $895 million. Analysts count on Jos. A. Financial institution to report income of about $1.05 billion in 2013.
With the acquisition of Eddie Bauer, Jos. A. Financial institution – best identified for renting and selling tuxedos – would make its first move into girls’s apparel and footwear.
The company said it had been pursuing Eddie Bauer for two years in an effort to spice up shareholder worth and had contacted Golden Gate several instances to discuss a deal.
Goldman Sachs and Financo LLC are monetary advisers to Jos. A. Bank, whereas Skadden, Arps, Slate, Meagher & Flom LLP and Guilfoil Petzall & Shoemake LLC are its legal advisers.
Kirkland & Ellis LLP is authorized adviser to Golden Gate Capital and Eddie Bauer.
Jos. A. Financial institution estimated adjusted earnings of $1.04-$1.10 per share for the tie dye team shirts fourth quarter ended Feb.