Men's Wearhouse has adopted a so-called "poison pill" stockholder rights plan after the US apparel retailer rejected a US$2.3bn takeover offer from Jos A Bank

The rights plan will allow shareholders to acquire the retailer's common stock at a discounted price if a person or group buys 10% or more of its stock or if a passive institutional investor acquires 15% in a transaction not approved by the board.

It will expire on 30 September 2014. The rights plan is not intended to prevent an acquisition of the company on terms that the board considers favourable and fair to and in the best interests of all shareholders, Men's Wearhouse explained. 

The move comes after Men's Wearhouse yesterday (9 October) rejected the $48 per share offer from the rival men's wear business, because it "significantly undervalues" the company.

The group also believed the proposal was "opportunistic", subject to unacceptable risks and contingencies, and was not in the best interests of its shareholders.

Jos A Bank, meanwhile, said the rejection was "inexplicable" and the offer provided "substantial, immediate, and certain value" for Men's Wearhouse shareholders.

The proposal, Jos A Bank noted, is "significantly greater" than the highest price at which Men's Wearhouse stock has traded over the last five years.

"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," it added. 

"If the board of Men's Wearhouse has questions about our proposal, we should sit down and discuss them. We are confident we can address all of their questions and are prepared to do so immediately."