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Jos. A. Bank investor won’t take no for an answer

It’s clear that The Men’s Wearhouse is set on an acquisition of Jos. A. Bank Clothiers Inc.

The Jos. A. Bank store in the Kenilworth Mall in Towson. (The Daily Record / Maximilian Franz)

And Eminence Capital LLC, a hedge fund based in New York, won’t take no for an answer.

The firm sent a letter to Hampstead-based Jos. A. Bank, dated Monday, urging the company to engage in talks with Men’s Wearhouse about getting together.

It also filed a complaint with the Court of Chancery of the State of Delaware, seeking an injunction on any actions that Bank might take to prevent an acquisition by Men’s Wearhouse. The complaint says that Bank’s directors have breached their fiduciary duties by rejecting a merger, in the interest of their positions on the board.

Eminence owns 9.8 percent of Men’s Wearhouse’s shares and 4.9 percent of Bank’s shares.

Jos. A. Bank made an initial offer in September to buy Men’s Wearhouse for $48 a share.

The latter declined, and came back with its own offer of $55 a share to buy Bank. When the Maryland clothier turned down the offer and subsequently revised its poison-pill policy to fend off a buyout, Men’s Wearhouse responded with a hostile takeover attempt, offering $57.50 in cash per share.

Meanwhile, Eminence Capital made sure its voice was heard. On Nov. 20, it released a presentation to Men’s Wearhouse, urging the company to seek a merger with Jos. A. Bank after it turned down the initial offer from that company. The presentation cited potential cost savings that could benefit shareholders.

Eminence released statements of support for both of Men’s Wearhouse’s offers. But Monday’s action marked its first direct request to Jos. A. Bank, which said after Men’s Warehouse declined its offer that it would consider other opportunities for acquisition.

In his letter to Jos. A. Bank’s board of directors Monday, Eminence’s CEO, Ricky Sandler, said: “We firmly believe that you will not be able to deliver comparable value to shareholders through any other strategic transaction or action available to you.”

Jos. A. Bank declined to comment.

Other institutional investors have not been so keen to speak out on the potential merger. Fidelity Investments, Royce & Associates and Ameriprise Financial declined to comment, and other firms could not be reached.

A portfolio manager from Morgan Dempsey, however, has candidly spoken in opposition to a combination.

“To ruin that whole organic story of Joe Bank for a fast deal … is ridiculous,” said Brian G. Rafn, principal and portfolio manager at Morgan Dempsey, which owns about 0.8 percent of Jos. A. Bank’s stock. “From our standpoint, the merger of these two I think is a huge disaster.”

Jos. A. Bank closed at $56.41 Monday, up 0.71 percent. The Men’s Wearhouse closed at $50.39, down 1.35 percent.