There were rumors about Kate Spade putting itself up for sale, and then those rumors became more and more true.
Especially now that someone has actually purchased the fashion retailer with that someone being Coach.
Hangbag maker Coach and Kate Spade both made the big announcement on Monday that the former would be buying the latter for $2.4 billion.
“Kate Spade has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers, especially millennials,” Coach CEO Victor Luis said in a statement.
Compared to Kate Spade’s closing price on Friday, the deal comes out to a 9% premium at $18.50 per share in a cash offer and will add to Coach’s adjusted earnings in fiscal 2018.
Coach just reported earnings that smashed expectations last week and the stock is up almost 7% in the last 12 months. Kate Spade is down over 20% for the year.
Neil Saunders of GlobalDate Retail said, ” … this is a sensible deal both in terms of the brand fit and the premium that Coach is paying. Ultimately the aim for Coach is to become a business with a portfolio of distinct and compelling luxury brands. Today’s announcement is the solid step on that journey.”
According to Coach, the deal is scheduled to close in the third quarter.
Disclaimer: We have no position in Kate Spade & Co (NYSE: KATE) nor Coach Inc. (NYSE: COH) and have not been compensated for this article.