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Coach acquires Kate Spade & Company

May 10, 2017 / United States
Coach acquires Kate Spade & Company
The New York-based design house of luxury accessories and lifestyle brands announced it has signed a definitive agreement to acquire Kate Spade & Company
The transaction has been unanimously approved by the Boards of Directors of Kate Spade & Company and Coach, Inc. Under the terms of the deal Kate Spade shareholders will receive 18.50 US dollars per share in cash for a total transaction value of 2.4 billion US dollars. The transaction represents a 27.5% premium to the unaffected closing price of Kate Spade’s shares as of the 27th of December 2016, the last trading day prior to media speculation of a transaction.

Victor Luis, Chief Executive Officer of Coach, Inc., stated: “Kate Spade has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers, especially millennials. 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.”

According to the Coach executives "the combination of Coach, Inc. and Kate Spade & Company will create a leading luxury lifestyle company with a more diverse multi-brand portfolio supported by significant expertise in handbag design, merchandising, supply chain and retail operations as well as solid financial acumen". Coach’s history and heritage, multi-channel, international distribution model, and seasoned leadership team uniquely position it to drive long-term sustainable growth for Kate Spade. Coach is focused on preserving Kate Spade’s brand independence as well as retaining key talent, ensuring a smooth transition to Coach, Inc.’s ownership.

The transaction is not subject to a financing condition. Coach has secured committed bridge financing from BofA Merrill Lynch. The 2.4 billion US dollars purchase price is expected to be funded by a combination of senior notes, bank term loans and approximately 1.2 billion US dollars of excess Coach cash, a portion of which will be used to repay an expected 800 million US dollars 6-month term loan. The transaction is expected to close in the third quarter of calendar 2017, subject to customary closing conditions, including the tender of a majority of the outstanding Kate Spade & Company shares pursuant to the offer and receipt of required regulatory approvals.

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