The “Pac Man” Defense Makes a Return Appearance

The recently launched Pac Man counteroffer by The Men’s Wearhouse, Inc. in response to a prior unsolicited offer by Jos. A. Bank Clothiers, Inc. provides a good opportunity to review the use and legal implications of the colorfully named but rarely used takeover defense.

BACKGROUND: THE MEN’S WEARHOUSE/JOS. A. BANK SITUATION -

In early October 2013, Jos. A. Bank, a major competitor of The Men’s Wearhouse, made an unsolicited proposal to acquire The Men’s Wearhouse for $48 per share in cash for a total of approximately $2.3 billion. That proposal was rejected by the board of directors of The Men’s Wearhouse, stating that it significantly undervalued the company and its recent growth initiatives. Although Jos. A. Bank terminated its unsolicited offer, on November 26, 2013, The Men’s Wearhouse submitted a counter-proposal to acquire Jos. A. Bank for $55 per share in cash for a total of approximately $1.2 billion. The “Pac Man” counteroffer was rejected by the board of directors of Jos. A. Bank. The Men’s Wearhouse subsequently commenced a tender offer to acquire Jos. A. Bank for $57.50 per share in cash and has announced its intention to nominate two independent director candidates for election to Jos. A. Bank’s board.

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