Men’s apparel brand Jos. A. Bank has entered a definitive agreement with Everest Topco LLC, a portfolio company of Golden Gate, to acquire Everest Holdings LLC, parent company of outerwear retailer Eddie Bauer. The $825 million acquisition consists of $564 million in cash, in addition to approximately 4.7 million shares of common stock valued at $56 per share.
Once the acquisition is finalized, Jos. A. Bank will move forward with an issuer tender offer to acquire 16.4% of its outstanding shares, worth approximately $300 million. Everest Topco will have the right to earn up to $50 million in cash based on Eddie Bauer’s 2014 profits.
The combined company will “pursue a series of initiatives to drive long-term growth and margin expansion, including growing store count, driving store productivity improvement and pursuing product enhancement initiatives and new categories,” according to a company press release.
The two brands will operate independently following the completion of the acquisition and issuer tender offer. Everest Topco will own approximately 16.6% of the Jos. A. Bank’s outstanding shares and will have the right to designate two directors on the company’s Board of Directors.
Jos. A. Bank has been planning a significant acquisition for the past two years. Eddie Bauer was one of the first acquisition candidates considered by the retail organization.
According to the company, Jos. A. Bank contacted Golden Gate multiple times to discuss a possible acquisition of Eddie Bauer: first in early 2012, and several times throughout the past two years, even before extending an offer to Men’s Wearhouse in September 2013.
“The Jos. A. Bank Board of Directors reviewed very carefully a number of strategic alternatives in addition to the Eddie Bauer transaction, including a possible acquisition of Men’s Wearhouse and the sale of the company to Men’s Wearhouse,” said Robert Wildrick, Chairman of Jos. A. Bank. “We are convinced that our transaction with Eddie Bauer and the issuer tender offer provide the greatest value creation opportunity for Jos. A. Bank shareholders. At the same time, the company’s board has preserved the ability to enter into an alternative transaction that creates greater value for our shareholders should such a transaction be proposed.”