Eminence Capital Scolds Jos. A. Bank
Eminence Capital, LLC, the hedge fund has been pushing for a merger between rival retailers The Men’s Wearhouse and Jos. A. Bank, is upset by the latter’s acquisition of Eddie Bauer last week.
Eminence Capital CEO Ricky Sandler, who had filed a complaint in Delaware Court of Chancery to prevent Jos. A. Bank from making such a move, lashed out at the retailer in an open letter late yesterday: “The management team and board of Jos. A. Bank are willing to engage in desperate tactics in an effort to protect their jobs and paychecks in blatant disregard for the best interests of shareholders.”
Jos. A. Bank has not yet released any statements in response to the letter.
Eminence Capital holds a 4.9 percent stake in Jos. A. Bank and a 10 percent stake in Men’s Wearhouse. The hedge fund had initially backed Jos. A. Bank’s bid for Men’s Wearhouse, but then got behind Men’s Wearhouse’s counter offer to acquire Jos. A. Bank.
Sandler’s indignant letter continued: “We firmly believe that the acquisition of Eddie Bauer for nearly $900 million (inclusive of fees and expenses) is a poor strategic decision for Jos. A. Bank at a price that is in our view excessive and almost surely destroys shareholder value. This ‘bet the company’ strategy on Eddie Bauer – a company which we believe offers minimal product or customer overlap and effectively no credible synergies – defies industrial logic in our opinion. More than 40 percent of Eddie Bauer’s sales are to women and virtually all of its products are outside of Jos. A. Bank’s core men’s tailored clothing segment. Additionally, through this acquisition the company will enter more discretionary and fashion oriented categories in retail apparel, thereby significantly increasing the company’s risk profile.”
Sandler added that he intended “to hold the board accountable for its actions both through the upcoming proxy vote and through direct actions in court.”
Read the entire letter to the Jos. A. Bank board here.
Eminence Capital, founded in 1998, manages $4.9 billion. According to the Wall Street Journal, this is Eminence’s first high-profile activist deal.
