American bags and accessories design house Coach has acquired its rival Kate Spade for US $2.4 billion.
In a statement on its site on Monday, the company stated its aim to create a more diverse multi-brand portfolio. It also noted Kate Spade’s truly unique and differentiated brand positioning along with with its strong awareness among consumers, especially millennials.
CEO of Coach, Victor Luis in a statement touted the company’s experience operating retail stores around the world and brand building in foreign markets, saying it would be poised to tap Kate Spade’s potential for international expansion.
“The acquisition of Kate Spade is an important step in Coach’s evolution as a customer-focused, multi-brand organization,” Luis said in a statement. “The combination enhances our positon in the attractive global premium handbag and accessories, footwear and outerwear categories.”
Coach plans to finance the deal with senior notes, bank term loans and about US $1.2 billion of cash, according to the statement.
The deal is expected to close in the third quarter of 2017 and add to adjusted earnings in fiscal 2018.
The deal comes two months after Kate Spade said it was exploring strategic options. Hedge fund Caerus Investors had urged the company in November to sell itself, citing the management’s inability to achieve profit margins comparable to industry peers.
Coach’s financial adviser was Evercore Group and its legal adviser was Fried, Frank, Harris, Shriver & Jacobson LLP.
Kate Spade was advised by Perella Weinberg Partners LP, while Paul, Weiss, Rifkind, Wharton & Garrison LLP was its legal adviser.
The deal is expected to close in the third quarter of 2017 and add to adjusted earnings in fiscal 2018
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