Men’s Wearhouse and Jos. A. Bank finally found the perfect fit. The competing clothiers put an end to a months-long standoff on Tuesday with Jos. A. Bank agreeing to be bought by Men’s Wearhouse in a cash deal worth $1.8 billion.
The two menswear retailers have been locked in a hostile courtship since October, when Houston-based Men’s Wearhouse rejected an unsolicited $2.3 billion takeover offer submitted by Jos. A. Bank before responding with its own unsolicited bid for its Hampstead, Md.–based rival the following month. The Jos. A. Bank board eventually rejected that cash offer, which valued the company at $55 per share, saying the proposal undervalued the company.
Each company adopted its own limited shareholder rights plan, or “poison pill,” in order to protect against a hostile takeover. In spite of that measure, Men’s Wearhouse returned in January with a sweetened, $57.50-per-share offer that it took directly to the target’s shareholders. Jos. A. Bank urged its shareholders not to act on that Men’s Wearhouse bid.
Last month, Jos. A. Bank upped the ante by agreeing to buy clothing brand Eddie Bauer from private equity firm Golden Gate Capital in an $825 million deal. The deal gave Jos. A. Bank a clear strategic alternative to the Men’s Wearhouse deal, but the terms of the agreement with Golden Gate also included a provision allowing Jos. A. Bank to back out of the purchase should it be presented with a more attractive takeover offer, provided Jos. A. Bank pay a termination fee valued at roughly $48 million.
That more attractive offer arrived Tuesday with Men’s Wearhouse agreeing to pay $65 in cash for each Jos. A. Bank share in a deal that values the company at $1.8 billion. The offer represents a premium of more than 50 percent over Jos. A. Bank’s closing price on Oct. 8, before its offer for Men’s Wearhouse was announced.
As part of the deal—which is expected to close before the third quarter, pending regulatory approval—Jos. A. Bank has terminated its agreement to buy Eddie Bauer and has also cancelled a planned $300 million stock buyback program.
Willkie Farr & Gallagher has represented Men’s Wearhouse throughout the past five months with regard to Jos. A. Banks. Corporate and financial services department cochair Steven Seidman has been leading an all-New York team along with corporate partners Laura Delanoy, Jeffrey Hochman and Michael Schwartz. Finance partner Jeffrey Goldfarb, benefits partner Michael Katz and real estate partner David Drewes are also advising along with litigation partners Joseph Baio, Mary Eaton, Deirdre Hykal, Jeffrey Korn, Tariq Mundiya, Wesley Powell and William Rooney and litigation of counsel Ian Hochman. Willkie associates are Laura Acker, Michael Barnett, Max Bryer, Morgan Clark, Nicole Humphrey, Meghan Hungate, Shaimaa Hussein, Jonathan Kubek, Jodi Lucena-Pichardo, Nicole Naples, Susannah Ostlund, Daniel Philion, Agathe Richard, Carly Glover Saviano, Andrew Shapiro, Marit Spekman, David Stoltzfus and Ryan Stott.
Meanwhile, Jos. A. Bank is represented by attorneys at Skadden, Arps, Slate, Meagher & Flom and St. Louis–based business law boutique Guilfoil Petzall & Shoemake. Both firms have been advising the company on its dealings with Men’s Wearhouse as well as in the terminated acquisition of Eddie Bauer. (Kirkland & Ellis represented both Eddie Bauer and Golden Gate.)
Skadden’s team includes M&A partners Paul Schnell and Jeremy London, as well as M&A of counsel William Frank and associate Allison Schiffman. All are in New York but London, who is in Washington.
Jos A. Bank’s general counsel is Charles Frazer.
An investor group led by Cerberus Capital Management has struck a deal to acquire Pleasanton, Calif.-based grocery store chain Safeway for roughly $9 billion in the largest leveraged buyout so far this year.
The consortium buying Safeway—the nation’s second-largest grocery chain, behind Kroger—plans to merge the acquisition with its portfolio of grocery store brands, led by the Albertsons chain.
The terms of the deal, which was announced Friday, call for Safeway shareholders to receive $32.50 in cash for each of their shares in the company, along with distributions of proceeds from asset sales valued at $3.65 per Safeway share. The Safeway shareholders will also receive an additional $3.95 per share as part of the company’s previously announced plan to distribute its remaining shares in gift card company Blackhawk Network to shareholders. Overall, the deal values Safeway shares at $40 apiece—a 17 percent premium over the target’s closing price on Feb. 18, the day before Safeway said it was in talks to be sold.
The Cerberus-led group—which also includes Kimco Realty Corporation, Klaff Realty, Lubert-Adler Partners and Schottenstein Stores Corporation—will finance the deal with $7.6 billion in debt, as well as equity and cash on hand.
Safeway operates 1,335 stores and employs 138,000 people. Cerberus said in its announcement of the deal that the acquisition will result in a combined portfolio of 2,400 grocery stores, 27 distribution facilities and 20 manufacturing plants that taken together employ more than 250,000 people. Cerberus added that it does not foresee any stores closing as a result of the deal, which is expected to close in the fourth quarter, pending approval by regulators as well as Safeway shareholders.
Schulte Roth & Zabelis acting as lead counsel to Albertsons and the investor consortium. The firm is longtime outside counsel to Cerberus, where former Schulte partner Mark Neporent serves as chief operating officer, general counsel and senior managing director.
The all-New York Schulte team includes business transactions partners Stuart Freedman, John Pollack and Robert Loper. Employee benefits partners Ronald Richman and Laurence Moss are also advising, along with antitrust partner Michael Swartz, tax partner Alan Waldenberg, finance partner Ronald Risdon, business transactions special counsel Kimberly Monroe and tax special counsel Noah Beck. Real estate partners Jeffrey Lenobel, Robert Nash and Julian Wise also worked on the deal. Schulte associates are Matthew Gruenberg, Colin McKeon, Kristen Poole and Elliott Tapp.
The buyers are receiving antitrust advice from a group of firms that includes Schulte as well as Dechert and Baker Botts. Washington, D.C.–based Dechert antitrust partners Paul Denis and James Fishkin are advising Albertsons along with associates Rani Habash and Craig Falls. Washington, D.C.–based Baker Botts antitrust partner Christopher MacAvoy is also advising Albertsons on matters related to the Federal Trade Commission.
The buyers’ in-house team includes Lisa Gray—general counsel of Cerberus Operations & Advisory Company—as well as Albertsons general counsel Paul Rowan and assistant general counsel Susan McMillan.
For its part, Safeway has turned to a team of Latham & Watkins attorneys led by San Francisco–based corporate partner Scott Haber, as well as New York–based corporate partners M. Adel Aslani-Far and Eli Hunt. Additional lawyers in Chicago, Los Angeles and San Francisco are real estate partner Robert Buday, employee benefits partner James Barrall and tax partners Grace Chen and Kirt Switzer, along with corporate of counsel Barry Bryer, tax of counsel John Clair and employee benefits counsel Scott Thompson.
Robert Gordon is Safeway’s general counsel.
Skadden, Arps, Slate, Meagher & Flom is advising Goldman Sachs in connection with its role as financial adviser to Safeway with a team led by M&A partner David Eisman in Los Angeles and M&A counsel Troy Vigil in Sydney, Australia.
Munger, Tolles & Olson is advising Greenhill & Co. in its role as financial adviser to Safeway’s board of directors. Lawyers are corporate partner Mary Ann Todd, corporate partner Brett Rodda and associate Andrew Wolstan. All are in Los Angeles.
@|“New Deals” reports on major business transactions and the attorneys involved. Tom Huddleston Jr. is a reporter for Am Law Daily, a Law Journal affiliate. Submit items by e-mail to firstname.lastname@example.org.