UPDATE 1-Jos. A. Bank urges shareholders to reject Men's Wearhouse bid
Jan 17 (Reuters) - Suit retailer Jos. A. Bank Clothiers Inc's board urged shareholders to reject a $1.61 billion hostile bid from Men's Wearhouse Inc, calling it inadequate and opportunistic.
In response, Men's Wearhouse called on Jos. A. Bank's shareholders to vote its nominees to the board, replacing Chairman Robert Wildrick and Chief Executive R. Neal Black.
Men's Wearhouse also urged Jos. A. Bank's independent directors to form a special committee to evaluate its tender offer of $57.50 per share and begin talks.
Jos. A. Bank said on Friday that the offer significantly undervalued the company and its future prospects.
Men's Wearhouse launched the hostile bid on Jan. 6 - about two weeks after Jos. A. Bank rejected its previous offer of $55 per share - aiming to pressure its smaller rival into a deal that would pacify investors hungry for a merger of the suit retailers.
Eminence Capital LLC, a key shareholder in both the companies, filed a suit in the Delaware Court of Chancery on Monday to prevent Jos. A. Bank's board from refusing to discuss the offer, accusing it of breaching its fiduciary duties.
Jos. A. Bank sought on Friday to have the case dismissed, saying the action interfered with its board's ability to explore alternatives to the merger and engage in talks with other potential suitors.
The development on Friday is the latest twist in a saga that began last October, when Men's Wearhouse swiftly rebuffed Jos. A. Bank's offer to buy it for $2.3 billion.
On Friday, Jos. A. Bank's board said it was told by its financial adviser, Goldman Sachs, that the tender offer was inadequate from a financial point of view.
The tender offer is scheduled to expire on March 28.
Shares of Jos. A. Bank, a century-old retailer of men's tailored and casual clothing, closed slightly higher at $56.49 on Friday on the Nasdaq.
Men's Wearhouse shares closed 1 percent down at $50.45 on the New York Stock Exchange.