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LEGAL MUDSLINGING: Eminence Capital has filed an amendment to its amended complaint in a Delaware Chancery Court against Joseph A. Bank Clothiers Inc. and its board members seeking to bar the chain’s acquisition of Eddie Bauer.
The activist hedge fund said the Joseph A. Bank board is using a “scorched earth” defense to bar The Men’s Wearhouse Inc.’s premium offer from going to shareholders for a vote, an offer that it said Men’s Wearhouse is willing to raise.
Eminence, a shareholder of both publicly held chains, took issue with the Eddie Bauer acquisition being effected without need of the approval of Joseph A. Bank shareholders, and said the 6 percent break-up fee at $48 million is twice the average rate of such fees. It also said the merger is destroying $40 million in value, given the issuance of 4.7 million shares at $56 a share to Eddie Bauer’s parent, Golden Gate Capital, after buying back 4.7 million shares at $65 a share. Eminence also alleged that the board’s tactics are to entrench themselves, alleging that the board rescinded its 20-year tenure limit in 2011 so members, including chairman Robert Wildrick — who is close to reaching the 20-year mark — can continuing serving on the board.
Joseph A. Bank declined comment.