Coach to Buy Kate Spade in $2.4 Billion Deal
May 08 2017 - 7:58AM
Dow Jones News
By Joshua Jamerson
Handbag retailers Coach Inc. and Kate Spade & Co. have
agreed to tie their fortunes together, striking a $2.4 billion deal
in which Coach will acquire Kate as the brands search for
reinvigorated growth.
Coach will pay Kate Spade shareholders $18.50 a share in cash.
That represents a 28% premium to Kate's closing price as of Dec.
27, the last trading day before a Wall Street Journal report that
Kate was exploring a sale of the company after coming under
pressure from an activist shareholder. The company confirmed it was
reviewing such options in February.
Coach Chief Executive Victor Luis said the companies hope the
deal will "unlock Kate Spade's largely untapped global growth
potential," and he described the deal as "an important step in
Coach's evolution."
Coach has long been considered a good home for Kate Spade, given
Coach's focus on handbags and accessories and its department-store
presence. Coach also could help Kate expand abroad.
Both companies, based in New York, have battled a retail
environment has been challenging, especially for designers that
have significant exposure to department stores, where traffic has
declined. U.S.-based luxury brands are also negatively affected by
a strong U.S. dollar.
Kate Spade shares rose 8% to $16.97 in recent premarket trading.
Coach shares were unchanged from their Friday closing price of
$42.66.
The transaction, expected to close in the third quarter, is
subject to the tender of a majority of the outstanding Kate Spade
shares as well as regulatory approvals.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
May 08, 2017 07:43 ET (11:43 GMT)
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