US: Eminence says Jos A Banks' acquisition "poor decision"
Jos A Bank Clothiers last week revealed plans to buy outdoor wear brand Eddie Bauer from private equity firm Golden Gate Capital in a deal worth US$825m.
In a letter to the board yesterday (18 February), Eminence, which owns a 4.9% stake in Jos A Bank, accused the company of issuing "suspect and misleading financial guidance" in a bid to justify its decision. It also suggested the price paid for Eddie Bauer was too high.
"Your actions and behaviour surrounding the offer made by The Men's Wearhouse and subsequent decision to enter into an agreement to purchase a completely unrelated business like Eddie Bauer demonstrate to us and the rest of your shareholders a total and complete disregard for your principal role: serving as a steward for shareholders in maximising value," said Eminence CEO Ricky Sandler.
"In our view these decisions defy any sense of sound business judgement. To us, they appear designed for the sole purpose of keeping this management team and board employed. Make no mistake about it - we intend to hold the board accountable for its actions both through the upcoming proxy vote and through direct actions in court," he added.
Eminence, however, is also the largest shareholder in Men's Wearhouse and has been pushing for a merger between the two suit sellers who have been embroiled in a long-running battle.
Earlier this month, Jos A Bank Clothiers turned down yet another acquisition bid by Men's Wearhouse, stating the offer "substantially undervalues" the company and that it therefore sees "no benefit in commencing negotiations".
Its previous bid for Men's Wearhouse, however, has been backed by Eddie Bauer's owner, Golden Gate Capital.
Jos A Bank announced its intent to purchase larger rival Men's Wearhouse in October. After that effort was rebuffed, Men's Wearhouse mounted its own effort to buy Jos A Bank, which was, in turn, rejected.
Separately, The Shareholders Foundation yesterday revealed a Jos A Bank investor had filed a lawsuit in connection with the rejected offer by Men's Wearhouse.
The plaintiff alleges directors of Jos A Bank breached their fiduciary duties owed to stockholders by rejecting the offer and by implementing tougher takeover defenses at Jos A Bank after the takeover offer. It did not name the investor.
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