Jos. A. Bank finally found another retailer happy to be acquired by it; the clothier will purchase Eddie Bauer for $825 million in cash and stock.
Eddie Bauer, a casual clothing retailer with 370 stores in the U.S. and Canada, is owned by Golden Gate Capital, a private equity firm. Jos. A. Bank has offered them $564 million in cash in addition to 4.7 million new shares at $56 per share. At the closing of the deal, Golden Gate will own 16.6% of Jos. A. Bank’s shares, instantly making it the largest shareholder. The next largest shareholder is Fidelity Management Research & Co., which currently owns 13.5% of Jos. A. Bank’s stock. At least in part, Jos. A. Bank will finance the deal with a loan from Goldman Sachs.
Jos. A. Bank’s recent history of acquisition attempts has been complex. Last October, it made a bid to purchase Men’s Wearhouse, an overture indignantly rebuffed by the retail rival. Men’s Wearhouse then made a counter-attempt to acquire Jos. A. Bank, and was similarly rejected. Men’s Wearhouse offered $1.5 billion in December.
To make matters even more complicated, Jos. A. Bank was backed by Golden Gate Capital in its attempt to buy Men’s Wearhouse. The private equity firm is responsible for bringing Eddie Bauer back from the brink of bankruptcy in 2009, putting up $286 million in case and taking on liabilities worth hundreds of million of dollars.
Jos. A. Bank reported that its fourth quarter sales increased 0.4% and same-store sales rose 1.8%. Once the purchase of Eddie Bauer is finalized, it is expected to immediately contribute to Jos. A. Bank’s earnings.