Jos. A. Bank buying parent company of Eddie Bauer in $825 million deal

Associated Press

After months of flirting with the idea of combining with a rival, Jos. A. Bank has decided it is better suited for another men’s clothing brand.

Or has it?

The chain that’s known for its men’s suits and 2-for-1 sales said Friday that it struck a deal to buy the parent company of Eddie Bauer, which sells rugged outerwear. The deal was reached with Everest Topco LLC to buy Everest Holdings LLC in a cash-and-stock deal valued at $825 million.

But the acquisition, which comes as Jos. A. Bank is being pursued by Men’s Wearhouse Inc., isn’t written in stone: Jos. A. Bank said Friday that it may end the Eddie Bauer deal if it receives an acquisition offer that is superior. It would have to pay a termination fee if it accepted another offer.

“We are looking for a chance to be more important for a specific customer demographic,” Jos. A. Banks’ CEO and president Neal Black told The Associated Press.

The deal comes in the middle of an extended courtship between Jos. A. Bank and Men’s Wearhouse Inc. It began in October when Jos. A. Bank offered to buy its larger rival for $2.3 billion.

Men’s Wearhouse scoffed at that offer, and turned the tables, offering to buy its rival for $1.54 billion. But after Jos. A Bank turned down that overture, Men’s Wearhouse boosted its offer last month to $1.6 billion.

Men’s Wearhouse said Friday that it will consult with its legal and financial advisers to evaluate its options with regards to Jos. A. Bank. Its shares fell more than 5 percent in afternoon trading Friday as investors apparently worried that a deal between it and Jos. A. Bank now is less likely.

Some analysts Friday questioned why Jos. A. Bank would choose to buy Eddie Bauer, which some believe is past its prime. They say that Men’s Wearhouse could be a better fit for the chain.

Eddie Bauer and Jos. A. Bank both cater to similar customers — the 35-to-55-year-old who has an annual income of $100,000 to about $125,000 and is budget-conscious — but the companies sell different merchandise.

By comparison, Men’s Wearhouse and Jos. A. Bank cater to different customers, but they offer similar types of clothing: suits and sport coats.

Richard Jaffe, an analyst at Stifel Nicolaus who covers clothing retailers, said the fit of a Jos. A. Bank-Eddie Bauer combination “is much easier, but the benefits are less clear-cut.”

Jos. A. Bank said it has been identifying possible acquisition candidates over the past two years. The company said Eddie Bauer was one of the first buyout targets it considered.

Though the two brands plan to run independent of each other after the transaction is complete, Black, the Jos. A. Bank CEO, told The Associated Press that both brands should learn from each other’s strengths.