$1.8 billion deal will merge Men’s Wearhouse and Jos. A. Bank

NEW YORK — Looks like the best suitor won.

After an extended chase that included overtures on both sides, Men’s Wearhouse and Jos. A. Bank will combine to create the nation’s fourth largest seller of men’s wear.

Men’s Wearhouse Inc. said Tuesday that it’s buying its rival Jos. A. Bank Clothiers Inc. for $1.8 billion. The company will pay $65 a share, a 5 percent premium to Jos. A. Bank’s most recent closing price. As part of the deal, Jos. A. Bank also said it’s terminating its deal to acquire the parent company of Eddie Bauer, which sells rugged outerwear.

The acquisition comes after months of the two chains publicly fighting over who would acquire whom. Industry watchers had speculated that a merger was inevitable given the challenges the companies face in the increasingly competitive men’s wear landscape. With more than 1,700 U.S. stores and $3.5 billion in annual sales, the combined company’s reach in men’s clothing will fall behind only Macy’s, Kohl’s and J.C. Penney.

Jos. A. Bank made the first move in October when it offered to buy its larger rival for $2.3 billion, just a few months after Men’s Wearhouse ousted its founder and chairman. Men’s Wearhouse shot down that offer, and turned the tables, offering to buy its rival for $1.54 billion. But after Jos. A. Bank turned down that bid, Men’s Wearhouse increased its offer to $1.6 billion, and then again to $1.78 billion.

In the middle of the back-and forth, Jos. A. Bank said last month that it was buying the parent of Eddie Bauer, but left the door open for a deal with Men’s Wearhouse. At the time, it said if it received a superior acquisition offer, it would pay a termination fee to end the Eddie Bauer deal.

By early March, Men’s Wearhouse had an offer of $63.50 per share on the table but said it may raise the bid to $65 per share if some conditions were met.

In a joint press release, the companies said shareholders will benefit from about $100 million to $150 million in savings realized over three years as eliminates corporate duplication and improves sourcing and merchandising. A spokesman for Men’s Wearhouse declined to comment on any layoffs or comment on management changes beyond what the release said: “management will consist of the most qualified individuals from both organizations.”

Analysts predict a bright future for the combined company. The suit business, which generated $2.3 billion in revenue last year, has been relatively healthy. The business has been up 4 percent over the past three years, after being flat or down since the recession, according to market research firm NPD Group. That has been fueled by tight-fitting suits that have attracted young males.

The companies also have complementary businesses. Men’s Wearhouse, which sells men’s sportswear and suits through its 1,200 stores at its Men’s Wearhouse, Moores and K&G chains, caters to young male customers looking for their first suit. Meanwhile Jos. A. Banks focuses on a more established clientele that’s looking for a good deal at its 623 stores with promotions like “buy one suit or sport coat and get three free.”

The transaction is expected to close by the third quarter.