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Men's Wearhouse to buy Jos. A. Bank

2:10 PM, Mar 11, 2014   |    comments
A man walks past a Men's Warehouse store on January 6, 2014 in New York City. (Photo by Andrew Burton/Getty Images)
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(USA TODAY) -- The Men's Wearhouse will buy Jos. A. Bank Clothiers in a cash deal worth $1.8 billion, or $65 a share, the companies said Tuesday.

Boards of directors of the companies have unanimously approved the transaction.

"We are excited by the opportunities this transaction presents," said Men's Wearhouse CEO Doug Ewert, "and are confident that our combined best-in-class offerings for our valued customers will drive significant shareholder value."

The companies have been volleying competing offers for each other since the fall, when Jos. A. Bank made an unsolicited offer to buy Men's Wearhouse for $48 a share. Men's Wearhouse rejected the bid and countered with its own to buy Jos. A. Bank for $55 a share. Most recently, Men's Wearhouse raised its bid to $63.50 a share two weeks ago.

Combining the companies will allow both to maximize merchandise offerings and store locations, the release said. Jos. A. Bank will retain its name. The merger will make the combined company the fourth-largest men's apparel retailer, with more than 1,700 stores in the U.S. and about 23,000 employees.

As part of the deal, Jos. A. Bank will not go forward with a separate agreement announced last month to buy Eddie Bauer for roughly $825 million.

Both companies have an opportunity to learn from each other and increase their value to customers through the deal, says Mark Montagna, senior analyst with Avondale Partners. Plus, "it's a win for both retailer's shareholders," he says.

He says Jos. A. Bank should adopt Men's Wearhouse's tux rental strategy and that Men's Wearhouse will be able to capitalize on Jos. A. Bank's expertise in sourcing product for less overseas without sacrificing quality.

"So both parties have a lot to learn on two really distinct areas," he says. "And that's very beneficial to both sales and margins."

Men's Wearhouse stock is up about 6.2% in early afternoon trading to $57.95. Jos. A. Bank shares are up 3.9% to $64.23 a share.

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