Men's Wearhouse Goes 'Pac-Man' On Joseph A. Bank

The retail company Men's Wearhouse has announced it is launching a takeover battle for rival Joseph A. Bank. What makes the effort unusual is that just last month Joseph A. Bank was trying to take over Men's Wearhouse. The turnaround is an example of what Wall Street calls a Pac-Man defense.

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GREENE: The retail company Men's Wearhouse announced yesterday it was launching a takeover battle for its rival Joseph A. Bank. Now what makes the effort unusual is that just last month, Joseph Bank was trying to take over Men's Wearhouse. The turnaround is an example of what Wall Street calls a Pac-Man defense.

NPR's Jim Zarroli reports.


JIM ZARROLI, BYLINE: In the classic 1980s video game, Pac-Man is chased around a maze by little ghosts. But when he eats a power pellet, he can suddenly turn around and devour his pursuers.

James Angel, professor of finance at Georgetown University, says that's essentially what Men's Wearhouse is trying to do.

JAMES ANGEL: The Pac-Man defense is where the target turns around and tries to buy the company that's trying to buy it.

ZARROLI: Last month, Joseph Bank launched a takeover bid for Men's Wearhouse. A lot of people on Wall Street think the merger makes some sense. But Men's Wearhouse fought back and the bid failed. Now the tables are turned. Angel says this is all part of a kind of mating dance between companies.

ANGEL: What? You want to merge with me? You're not paying enough. You need to pay my shareholders more. So go away. Oh, they really did go away. Hmm. Well, maybe I should but them now.

ZARROLI: Angel says the management of one company often resists being acquired because they might end up losing their jobs. But in this case, activist shareholders have been pressuring the two companies to merge - which means this deal is likely to take place - no matter which company ends up buying the other.

Jim Zarroli, NPR News, New York.

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