Talking Numbers

Why this takeover candidate could still be undervalued

Why this takeover candidate could still be undervalued

Jos. A. Bank decided they didn't like the way they looked to Men's Wearhouse.

Men's Wearhouse received a "no" response for their $1.5 billion acquisition offer of Jos. A. Bank on Monday. According to Jos. A. Bank, the offer of $55 per share in cash "significantly undervalues" their company. Jos. A. Bank currently trades above $56 per share. .

(Read more: Jos. A. Bank rejects Men's Wearhouse proposal)

Men's Wearhouse issued a statement that they were "surprised" by Jos. A. Bank's rejection, saying:

"As previously announced, the Men's Wearhouse proposal represents a 45% premium over Jos. A. Bank's unaffected enterprise value and a 32% premium over Jos. A. Bank's closing share price on October 8, 2013, the day prior to the public announcement of Jos. A. Bank's proposal to acquire Men's Wearhouse. The transaction represents a 9.1x enterprise value to last twelve months ("LTM") Adjusted EBITDA multiple (assuming $133 million of LTM Adjusted EBITDA as of August 3, 2013), a significant premium to Jos. A. Bank's proposal to acquire Men's Wearhouse. Men's Wearhouse intends to finance the transaction with a combination of balance sheet cash and debt financing."

As noted in an earlier installment of Talking Numbers, Men's Wearhouse's offer was actually a "Pac-Man defense" response to an offer to Jos. A. Bank's original offer to acquire the retailer.

(See: CNBC's Mergers and Acquisitions coverage)

So, will this deal ever get done and should try to find a way to play it? That is the question posed on CNBC's Street Signs' Talking Numbers segment.

Looking at the stock from the fundamentals is Pat Dorsey, president of Sanibel Captiva Investment Advisors. On the charts is Carter Worth, Chief Market Technician for Oppenheimer Asset Management Inc.

To hear what Dorsey and Worth say is next for a potential Jos. A Bank/Men's Wearhouse deal, watch the video above.

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