Jos. A. Bank Moves To Acquire Eddie Bauer For $825 Million
By Anna Rose Welch, Editorial & Community Director, Advancing RNA
Acquisition puts an additional wrench into the Men’s Wearhouse takeover goals
In a defensive move to keep Men’s Wearhouse away, Jos. A. Bank has announced its plans to acquire Eddie Bauer for $825 million. After months of negotiating with Men’s Wearhouse in what has now become a hostile takeover, Jos. A. Bank expects this deal will make itself a more expensive, and therefore, less attractive takeover option.
For months, the press has been focused on the tumultuous back and forth between Men’s Wearhouse and Jos. A. Bank in their seemingly endless negotiations. However, this Eddie Bauer deal has been in the works for a while, despite the fact its been kept under wraps until the last few weeks. According to the company, Eddie Bauer has been on its radar as a possible acquisition candidate since early 2012. For Jos. A. Bank, this acquisition expands its merchandise from men’s formal wear to women’s apparel and footwear. It should also add some stability to Eddie Bauer, which has slowly been working its way out of a period of bankruptcy and unstable brand identity. According to USA Today, the brand has faced intense competition from stores like Land’s End, L.L. Bean, and J. Crew. After declaring bankruptcy in 2009, it has begun, with Golden Gate Capital’s assistance, to improve and tighten up its merchandising strategy, in turn strengthening the brand. Jos. A. Bank estimates that, for the year ended December 31, 2013, Eddie Bauer raked in between $855 million and $895 million.
Now, following the close of the deal, the combined company is expected to generate more than $2.1 billion in revenue in 2014. The two companies will continue to be run independently, but will save roughly $25 million of identified process and infrastructure savings by 2015, Fierce Retail says. CEOs Neal Black of Jos. A. Bank and Mike Egeck of Eddie Bauer will remain in their positions following the deal.
As Robert Wildrick, chairman of Jos. A. Bank says, “We have long admired the Eddie Bauer brand and its widespread appeal among those with active lifestyles and excitement about the outdoors, a large and growing customer base that overlaps significantly with ours. Based on the success of Eddie Bauer’s turnaround and the outstanding opportunities a combination of our companies provides, we believe this transaction ideally positions Jos. A. Bank for the future.”
While this seems to be a match made in heaven, the agreement does give Jos. A. Bank the opportunity to back out of its agreement to acquire Eddie Bauer should another unsolicited offer be made that creates greater value for Jos. A. Bank shareholders. This does leave room for Men’s Wearhouse to make another deal that would sweeten the pot for Jos. A. Bank. According to the Wall Street Journal, Men’s Wearhouse has said it will continue to evaluate its options with respect to Jos. A. Bank.