Coach Pays $2.4 Billion To Acquire Kate Spade

As of Monday morning, news has broken as to a massive acquisition for Coach in the handbag market.

The brand has purchased their competitor, Kate Spade, for $2.4 billion cash. The price represents a premium offered of more than nine percent Kate Spade’s share price while the deal is expected to be finalized at the close of Q3 2017. Adjusted earnings surrounding it will be added in fiscal 2018.

Shares of both brands jumped with news of the transaction. Coach’s shares grew to $45.25 per share, a six percent increase, while shares of Kate Spade rose eight percent to $18.34.

“Kate Spade has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers,” said Coach Chief Executive Officer, Victor Luis, in a statement. He added that this holds true for millennial consumers especially.

Indeed, the decision from Coach stands to benefit their portfolio’s presence in the millennial market. The brand has stated that the demographic reflects roughly 60 percent of Kate Spade’s current consumers, while expecting to save $50 million within three years of the transaction’s finalization.

Kate Spade and its store locations are expected to remain independent from Coach as well.


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