Coach Inc. (NYSE: COH) (SEHK: 6388), a leading New York design house of modern luxury accessories and lifestyle brands, said it agreed to acquire New York-based Kate Spade & Company (NYSE: KATE) for $2.4 billion. The combination will create a leading luxury lifestyle company with a more diverse multi-brand portfolio.

The moves comes after Kate Spade engaged bankers to explore strategic alternatives, as reported by ExitHub earlier this year.

Kate Spade shareholders will receive $18.50 per share in cash, representing a 27.5% percent premium to the unaffected closing price of Kate Spade’s shares as of December 27, 2016, the last trading day prior to media speculation of a transaction. The deal has been unanimously approved by the Boards of Directors of both companies and is expected to close in the third quarter of 2017, subject to customary closing conditions.

Kate Spade operates principally under two global, multichannel lifestyle brands: kate spade new york and Jack Spade New York. The company’s four category pillars – women’s, men’s, children’s and home – span demographics, genders and geographies. Known for crisp color, graphic prints and playful sophistication, kate spade new york aims to inspire a more interesting life. The kate spade new york collection includes the Madison Avenue, Broome Street and on purpose labels. Jack Spade New York offers a timeless and versatile assortment of bags, sportswear and tailored clothing founded on the aesthetic of simple, purposeful design. The company also owns Adelington Design Group, a private brand jewelry design and development group.

“Kate Spade has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers, especially millennials,” said Victor Luis, Chief Executive Officer of 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 Coach brand was established in New York City in 1941, and has a rich heritage of pairing exceptional leathers and materials with innovative design. Coach is sold worldwide through Coach stores, select department stores and specialty stores, and through Coach’s website. In 2015, Coach acquired Stuart Weitzman, a global leader in designer footwear, sold in more than 70 countries.

“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,” said Craig A. Leavitt, Chief Executive Officer of Kate Spade.

The deal is not subject to a financing condition. Coach has secured committed bridge financing from BofA Merrill Lynch. The $2.4 billion purchase price is expected to be funded by a combination of senior notes, bank term loans and approximately $1.2 billion of excess Coach cash, a portion of which will be used to repay an expected $800 million 6-month term loan.

Coach’s financial advisor is Evercore Group LLC and its legal advisor is Fried, Frank, Harris, Shriver & Jacobson LLP. Kate Spade’s financial advisor is Perella Weinberg Partners LP and its legal advisor is Paul, Weiss, Rifkind, Wharton & Garrison LLP.



Thank you for contacting ExitHub. We'll respond as soon as possible.


© 2018 ExitHub Inc. All Rights Reserved.

Log in with your credentials


Forgot your details?

Create Account