Eminence Capital LLC (New York), one of the biggest investors in The Men’s Wearhouse Inc. (Houston), is urging the retailer to reconsider the acquisition offer made earlier this fall by Jos. A. Bank Clothiers Inc. (Hampstead, Md.).
Eminence, which owns a 9.8 percent stake in Men’s Wearhouse, made a 20-page presentation trumpeting the benefits of a merger and pressing for a special meeting of its fellow investors. The hedge fund said it plans to call for votes on amendments to the company’s bylaws that would make it easier to remove directors.
While Eminence said it agreed that Jos. A. Bank’s $2.3 billion, $48-a-share offer “was insufficient,” its presentation promoted the benefits of merging and accused Men’s Wearhouse management and directors of not serving shareholders.
Eminence pointed out that Jos. A. Bank has left open the possibility of both reopening merger talks and raising its offer if it were allowed to begin due diligence, access to which has previously been refused by the Men’s Wearhouse board.
While a merger would create a $4.9 billion “powerhouse in men’s suits, drawing on both Jos. A. Bank’s e-commerce operations and stronger business practices and Men’s Wearhouse’s strength in tuxedo rentals and its higher-end Joseph Abboud brand,” the standalone plan preferred by the Men’s Wearhouse board “is highly risky,” based on a promise of 4 percent same-store sales growth over the next three years and margins of about 35 percent, both of which are significantly higher than what the company has been able to achieve in recent years.