(Photo by Elaine Thompson/AP)
Jos. A. Bank said Friday it has agreed to buy the Eddie Bauer clothing brand from private equity firm Golden Gate Capital in a cash-and-stock deal worth $825 million.
The deal ups the ante in the standoff between Jos. A. Bank and rival clothier Men’s Wearhouse. The battle began in October with Jos. A. Bank making an unsolicited offer for Men’s Wearhouse. Men’s Wearhouse rejected that offer and responded with its own unsolicited bid for Jos. A Bank. The Jos. A. Bank board rebuffed that offer, prompting Men’s Wearhouse to respond with a sweetened bid that it took directly to Jos. A. Bank shareholders. That offer is set to expire on March 28.
As part of its agreement with Golden Gate, Jos. A. Bank has the right to back out of the Eddie Bauer purchase should a more attractive takeover offer for Jos. A. Bank present itself.
In announcing its agreement with Golden Gate, Jos. A. Bank said the company reviewed a variety of strategic options—including both acquiring or being acquired by Men’s Wearhouse—before deciding that an acquisition of Eddie Bauer, coupled with a planned share buyback, presented the greatest value to the Hampstead, Md.–based company’s shareholders.
Under the terms of the Eddie Bauer deal, Golden Gate will receive a combination of $564 million in cash and roughly 4.7 million Jos. A. Bank shares valued at $56 per share. As a result of the deal, Golden Gate will hold a roughly 16.6 percent stake in Jos. A. Bank and will be entitled to name two directors to the Jos. A. Bank board.
Once the deal closes, Jos. A. Bank plans to purchase up to $300 million of its own stock, valued at $65 per share, in a buyback meant to offset share dilution resulting from the issuance of shares to Golden Gate.
Eddie Bauer—which makes a range of casual sportswear and outerwear—was bought out of bankruptcy by Golden Gate for $286 million in 2009.
As has been the case throughout its dealings with Men’s Wearhouse, Jos. A. Bank is being represented by attorneys at Skadden, Arps, Slate, Meagher & Flom and St. Louis business law boutique Guilfoil Petzall & Shoemake.
Skadden’s team includes M&A partners Paul Schnell and Jeremy London in New York and Washington, D.C., respectively. Corporate finance partner Laura Kaufman Belkhayat, banking partner Steven Messina, real estate partner Neil Rock and M&A of counsel William Frank are also advising along with Skadden associates Maxim Mayer-Cesiano and Allison Schiffman. Charles Frazer is Jos. A. Bank’s general counsel.
Kirkland & Ellis, meanwhile, is advising both Eddie Bauer and Golden Gate with a team that includes New York–based corporate partners David Fox and Sarkis Jebejian as well as San Francisco–based corporate partners Mikaal Shoaib and Jeremy Veit. The firm is a frequent counsel of Golden Gate, having advised the buyout firm on its original purchase of Eddie Bauer out of bankruptcy. Jebejian was also named an Am Law Daily “Dealmaker of the Week” last year for his work leading a Kirkland team advising a consortium led by Bain Capital and Golden Gate on its $6.9 billion purchase of BMC Software.