After months of flirting with the idea of combining with a rival, Jos. A. Bank has decided it is better suited for another men's clothing brand.

Or has it?

The chain that's known for its men's suits and two-for-one deals said Friday that it struck a deal to buy the parent company of Eddie Bauer, which sells rugged outerwear. The deal was reached with Everest Topco to buy Everest Holdings in a cash-and-stock deal valued at $825 million.

But the acquisition, which comes as Jos. A. Bank is being pursued by Men's Wearhouse, isn't written in stone: Jos. A. Bank said Friday that it may end the Eddie Bauer deal if it receives an acquisition offer for its company that it feels is superior. It would have to pay a termination fee if it accepted another offer.

"We are looking for a chance to be more important for a specific customer demographic," Jos. A. Banks' CEO and president Neal Black told The Associated Press.

The deal comes in the middle of an extended courtship between Jos. A. Bank and Men's Wearhouse. It began in October when Jos. A. Bank offered to buy its larger rival for $2.3 billion.

Men's Wearhouse scoffed at that offer, and turned the tables, offering to buy its rival for $1.54 billion. But after Jos. A Bank turned down that offer, Men's Wearhouse boosted its offer last month to $1.6 billion.

Men's Wearhouse said Friday that it will consult with its legal and financial advisers to evaluate its options with regards to Jos. A. Bank. Its shares fell more than 5 percent in afternoon trading Friday on the news as investors apparently worried that a deal between it and Jos. A. Bank is less likely.


And some analysts on Friday questioned why Jos. A. Banks would choose to buy Eddie Bauer, which some believe is past its prime, over Men's Wearhouse.

Eddie Bauer and Jos. A. Bank both cater to similar customers -- the 35-to-55-year old customer that has an annual income of $100,000 to about $125,000 and is budget conscious -- but the companies sell different merchandise.

By comparison, Men's Wearhouse and Jos. A. Banks cater to different customers, but they offer similar types of clothing: suits and sport coats.

Stifel Nicholaus's Richard Jaffe said the fit of a Jos. A. Banks-Eddie Bauer combination "is much easier, but the benefits are less clear cut."


While the two brands plan to run independent of each other after the transaction is complete, Jos. A. Bank CEO Neal Black told The Associated Press that both brands should learn from each other's strengths.

He plans to expand Jos. A. Bank, which has 629 stores in 44 states and the District of Columbia, into markets outside the U.S. He's also hoping to expand Eddie Bauer, which sells men's and women's clothing and accessories in 270 stores in the U.S., Canada and Japan, by opening about 50 stores a year.


Jos. A. Bank said that it will start an issuer tender offer to acquire up to 4.6 million of its common shares, or 16.4 percent of its outstanding stock, at $65 per share, or up to $300 million.


Everest Topco, which is part of Golden Gate Capital, may also earn up to an additional $50 million in cash based on Eddie Bauer's adjusted earnings for fiscal 2014.

When the transaction closes, Everest Topco will own about 16.6 percent of Jos. A. Bank's outstanding stock. It will also have the right to appoint two directors to Jos. A. Bank's board.

Closing of the deal is a condition to completion of the tender offer.

Men's Wearhouse shares fell $2.46 to close at $44.07, while Jos. A. Bank shares rose 16 cents to $55.08.