So, I'm officially dorky because I heard the news of Jos. A. Bank announcing that it's acquiring Eddie Bauer, and I immediately thought, "Oooh, Valentine's Day merger news, just like Verizon and MCI in 2005." Yeah, that was me.
And the Men's Wearhouse/JAB/EB triangle is just as weird as the Verizon/MCI/Quest triangle. So, to recap, here is a timeline from Reuters. Highlights:
October 9, 2013 -- JAB offers to buy MW for $48/share or $2.3B. MW board rejects the offer.
Nov. 15, 2013 -- JAB withdraws offer, even after mutual shareholder urges MW to consider.
Nov. 26 -- MW offers to purchase JAB for $1.5B; $55/share.
Dec. 23 -- JAB rejects offer; MW threatens proxy contest for director seats.
Jan. 6 -- MW launches tender offer for $56.87/sh; mutual shareholder Eminence Capital threatens lawsuit/proxy contest against JAB board if they refuse to entertain the offer.
Jan. 14 -- JAB announces friendly acquisition of privately-held EB for $825 million.
The JAB/EB deal is fairly interesting because it seems one-sided. Here is the agreement. JAB can terminate if they get a "Superior Offer" that includes a Change of Control, with a termination fee of $48 or $55 million, depending. EB can also terminate if JAB gets a tender offer and JAB neither rejects or recommends it. Usually, we're worried about the Seller wriggling away with a better offer. Here, not so much. EB may be perfectly willing to pretend to be JAB's Valentine's date until MW goes away (for about $50 million). It will be interesting to see if this is a bluff.
A good M&A question is why this strategy? Using a whole bunch fo cash/debt to thwart MW's takeover plans. JAB, a Delaware corporation, has a poison pill, and we know that poison pills will be routinely upheld by the Delaware courts. The poison pill should be good against the tender offer and probably the proxy fight unless the institutional shareholders have enough shares to vote together against the JAB board. (Eminence Capital owns 5% of JAB and 10% of MW.)
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