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Men’s Wearhouse raises bid for rival, rips Bauer deal

NEW YORK — The hostile takeover battle between Men’s Wearhouse and Jos. A. Bank Clothiers intensified Monday.

Men’s Wearhouse, the larger of the two men’s suit retailers, said it had increased its unsolicited tender offer to $63.50 a share, up from its previous offer of $57.50.

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The company also filed a lawsuit to block Jos. A. Bank’s proposed acquisition of clothing retailer Eddie Bauer for $825 million in cash and stock.

The Eddie Bauer offer, made less than two weeks ago, was considered an attempt by Jos. A Bank to thwart any more unwelcome advances from Men’s Wearhouse.

Men’s Wearhouse said that Jos. A. Bank had until March 12 to consider the new proposal.

In its announcement, Men’s Wearhouse said it could “potentially” increase its offer to $65 a share if it could conduct limited due diligence and if the Eddie Bauer deal fell through and cost less than $48 million to terminate.

Shares of both companies rose sharply. Men’s Wearhouse jumped 7.5 percent, or $3.40, to $48.51, while Jos. A Bank increased 9 percent, or $4.99, to $60.04.

In a statement, Douglas S. Ewert, Men’s Wearhouse chief executive, urged the Jos. A. Bank board of directors to “immediately engage in negotiations with Men’s Wearhouse so we can capitalize on the opportunity we have to enter into a transaction that creates significant value for shareholders of both companies.”

Ewert said the new offer would provide Jos. A. Bank shareholders “with a substantial premium and immediate and certain value.”

Jos. A. Bank issued a brief statement Monday saying that its board would review the offer “and will make a recommendation to stockholders in due course.”

The developments are the latest in a takeover battle between the two companies that began in October, when Men’s Wearhouse resisted an unsolicited bid from its smaller rival. The company then turned the tables on Jos. A Bank and began its aggressive pursuit of an acquisition.

In January, Men’s Wearhouse said it would be willing to raise its offer of $57.50, which Jos. A. Bank had rejected earlier in the month.

Both companies have since toughened their poison pill thresholds — the percentage an investor must own to trigger a mechanism that dilutes the overall shares.

As part of its lawsuit Monday, Men’s Wearhouse demanded that Jos. A. Bank rescind its poison pill threshold. It also said that the plan to buy Eddie Bauer was not a “bona fide” corporate acquisition as part of a long-term plan.

“In fact, the Eddie Bauer transaction has little to do with the long-term welfare of JOSB and has everything to do with the short-term interest of the JOSB board — dominated by its longtime chairman, Robert Wildrick — to remain in control and fend off an unwanted suitor,” the lawsuit said, using the stock ticker symbol for Jos. A. Bank.

Men’s Wearhouse also criticized the proposed Eddie Bauer acquisition for having “almost no synergies” with Jos. A. Bank and cited analysts who had called the deal “totally off the wall.”

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