America’s two big mainstream men’s apparel brands finally found a fit with each other after several months of wrangling over whether they would get together and which would be in control if they did.
Men’s Wearhouse finally agreed to acquire the smaller Jos. A. Bank for $1.8 billion by paying $65 in cash. The deal ends a months-long saga that often seemed to have a foregone conclusion as the brands operated in a mature market where economies of scale can make an existential difference.
The merger will create America’s fourth-largest seller of men’s apparel, with annual sales of abaout $3.5 billion. Men’s Wearhouse said it would close stores duplicated in the same malls and take other measure to save more than $100 million a year for three years after the deal.[more]
Will each brand continue to stand alone? Men’s Wearhouse said that Jos. A Bank’s store banner will remain in place with no remodeling or rebranding, but didn’t elaborate beyond that. Though both brands stress low prices, Bank sells its own label while Men’s Wearhouse aims at a younger, more fashion-forward audience.
The companies lately came to agree on what the New York Times called “an inescapable logic” of combining. But over the last several months, each company and its investment bankers wrangled over which group would control a combined entity. At one point Bank offered just $2.3 billion for Men’s Wearhouse.
Another thing that became clear is that the Men’s Wearhouse’s well known founder and advertising pitchman, George Zimmer, wouldn’t be a player any longer. After installing his chosen successor as CEO, Zimmer stepped down in 2011 to become chairman of the board.
But then he soured on the performance of CEO Douglas Ewert and, last spring, talked with inveswtment bankers who advocated taking Men’s Wearhouse private. That was too much for Ewert, who got Zimmer ousted as chairman.
The potential interest of private-equity firms in Men’s Wearhouse began the ball rolling on the process that led to this week’s merger. And now the brands have to do a better job of explaining how they’re different—even though they’ll be cut from the same cloth.