NEW YORK — Nothing like getting the brushoff.
Jos. A. Bank proposed to acquire its bigger rival Men's Wearhouse in a $2.3 billion deal that would create a menswear juggernaut with close to 2,000 stores.
But the leaders at Men's Wearhouse rejected the offer about two hours after it was publicly disclosed, calling it “opportunistic” and “inadequate.”
Jos. A. Bank Clothiers disclosed Wednesday that it made the unsolicited proposal in September to buy Men's Wearhouse for $48 per share in cash, a 42 percent premium at the time. In rejecting the deal, Men's Wearhouse said it wasn't in the best interest of its shareholders or the company.
The proposal “significantly undervalues Men's Wearhouse and fails to reflect the company's growth strategy and upside potential,” Bill Sechrest, Men's Wearhouse's lead director of the board, said in a release.
Sechrest noted that a challenging second quarter led to a 12 percent decline in Men's Wearhouse's stock price, which the company believes doesn't fairly reflect the “intrinsic” value of the shares.
Shares of the company climbed $10.25, or 29 percent, to $45.49 by midday on Wednesday after trading as high as $45.56 earlier in the day, their highest level since February 2007. They had been up 13 percent since the beginning of the year.
Jos. A. Bank's shares rose $3.13, or 7.5 percent, to $44.78. The stock had been down 2.1 percent since the beginning of the year. Men's Wearhouse, which had revenue of $2.48 billion in the latest fiscal year, had a market value of $1.68 billion as of Tuesday's close, according to research firm FactSet. Jos. A. Bank, which had revenue of $1.05 billion in the latest year, had a market value of $1.17 billion.
Jos. A. Bank's fiscal second-quarter net income fell 39 percent, while Men's Wearhouse's fiscal second-quarter earnings fell 28 percent.
Jos. A. Bank made its offer Sept. 17, and privately pitched the deal to Men's Wearhouse executives in a phone call and follow-up letter.