Jos. A. Bank Clothiers Inc has proposed to buy bigger rival Men's Wearhouse Inc for about $2.3 billion to create a men's apparel heavyweight with more than 1,700 stores.
The $48 per share all-cash offer is a 36 percent premium to the closing price of Men's Wearhouse common stock on Tuesday.
Jos. A. Bank said Men's Wearhouse was reviewing the proposal, which it announced early on Wednesday.
The deal, which would be funded by a combination of cash-on-hand, new equity capital and debt, would "immediately and significantly" add to Jos. A. Bank's earnings, the company said.
Jos. A. Bank is partnering with Golden Gate Capital, which will make a $250 million equity investment in the company.
Men's Wearhouse has a market value of about $1.68 billion, compared with Jos. A. Bank's $1.17 billion.
Jos. A. Bank said in June it was considering strategic opportunities to enhance shareholder value, including acquisitions.
Jos. A. Bank, with more than 600 stores, is a century-old seller of men's tailored and casual clothing, according to its website. Men's Wearhouse, founded in 1973, sells discount suits through 1,137 stores, according to its website.
Shares of Jos. A. Bank fell about 2 percent to $41.66 on the Nasdaq on Tuesday. Shares of Men's Wearhouse dropped less than half a percent to $35.24 on the New York Stock Exchange.
(Reporting by Sakthi Prasad in Bangalore; Editing by Christopher Cushing and Gopakumar Warrier)