Jos A. Bank Says Eddie Bauer's a Good Fit

HAMPSTEAD, MD-Men's apparel retailer Jos. A. Bank Clothiers has entered an agreement with Everest Topco to buy Everest Holdings LLC, parent company of the Eddie Bauer brand, in a deal worth $825 million. Should a better, unsolicited offer for Jos. A. Bank itself come in, the Hampstead, MD-based retailer would have the right to terminate its agreement to acquire Eddie Bauer.

The purchase price for Eddie Bauer consists of a combination of $564 million in cash and approximately 4.7 million new shares of common stock of Jos. A. Bank, issued to Everest Topco at $56 per share. Following the closing of the acquisition, Everest Topco, a portfolio company of San Francisco-based Golden Gate Capital, will own about 16.6% of the Jos. A. Bank's outstanding shares and will have the right to designate two directors on the company's board.

The combined company is expected to generate more than $2.1 billion in revenue this year, as well as $255 million to $265 million of adjusted EBITDA and EPS of $3.20 top $3.40. On the agenda for driving long-term growth and margin expansion are: growing store count, driving store productivity improvement, pursuing product enhancement initiatives and new categories, pursuing additional licenses and global expansion.

"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," says Jos A. Bank's chairman, Robert N. Wildrick. "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, and Golden Gate's investment in our company and participation on our board is a strong endorsement of our plan."

Jos. A. Bank, which has sought potential acquisition candidates for the past two years, has had its eye on an Eddie Bauer deal for some time. It contacted Golden Gate a number of times beginning in 2012 before making its $2.3-billion offer to buy Men's Wearhouse, its larger rival, this past September.

That offer was turned down by Men's Wearhouse, which in November 2013 turned the tables with a $1.5-billion bid to buy Jos. A. Bank. The latter rebuffed the Men's Wearhouse bid in late December.

In view of the pending Eddie Bauer deal, Fremont, CA-based Men's Wearhouse, which last month commenced a cash tender offer to buy all outstanding Jos A. Bank shares for $57.50 per share, said Friday that it would evaluate its options. The cash tender offer expires on March 29.