Coach to Acquire Kate Spade

Acquisition will create the first New York-based house of modern luxury lifestyle brands.

Coach has signed a definitive agreement to acquire Kate Spade & Company for $2.4 billion.

Under the terms of the agreement, Kate Spade shareholders will receive $18.50 per share in cash. The transaction represents a 27.5 percent premium to the unaffected closing price of Kate Spade’s shares as of Dec. 27, 2016–the last trading day prior to media speculation of a transaction.

Additionally, Coach will focus on preserving Kate Spade’s brand independence as well as retaining key talent to ensure a smooth transition in ownership.

“Kate Spade has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers, especially Millennials,” says Victor Luis, chief executive officer, Coach. “Through this acquisition, we will create the first New York-based house of modern luxury lifestyle brands, defined by authentic, distinctive products and fashion innovation. In addition, we believe Coach’s extensive experience in opening and operating specialty retail stores globally, and brand building in international markets, can unlock Kate Spade’s largely untapped global growth potential. We are confident that this combination will strengthen our overall platform and provide an additional vehicle for driving long-term, sustainable growth.”

The deal is expected to close in the third quarter of 2017 and is subject to customary closing conditions.

“Following a thorough review of strategic alternatives, reaching an agreement to join Coach’s portfolio of global brands will maximize value for our shareholders and positions Kate Spade for long-term success as we continue our evolution into a powerful, global, multi-channel lifestyle brand,” says Craig Leavitt, chief executive officer, Kate Spade. “We look forward to working with Coach’s leadership team to leverage their expertise across the business as we continue to innovate and build long-term loyalty with consumers and expand across our product category and geographic axes of growth.”