Coach buys Kate Spade & Co. for $2.4 billion

The lux brand diversifies its portfolio.

Coach announced on Monday, May 8 that it would push forward in its deal to purchase its smaller rival, Kate Spade & Co.

The $2.4 billion deal means per agreement that it would buy the handbag company for $18.50 a share, which is comprised of 27.5 percent premium from Kate Spade’s closing shares from Dec. 27, 2016.

Kate Spade’s shares ended at $16.97 last week, when Kate Spade’s chief executive was spotted at Coach’s offices.

With its new acquisition, it’s a diverse portfolio, as Kate Spade has garnered a following with the millennial generation.

According to Women’s Wear Daily, 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.”

While Coach shares went up 1.2 percent to $43.37, Kate Spade’s shares have risen 8.5 percent to $18.41.

Coach’s chief executive, Victor Luis, commented on the deal to acquire Kate Spade:

“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.”

Kevin Wills, the chief financial officer of Coach, explained that it would reduce the sales at Kate Spade, ranging from its wholesale business to its online sales. The goal is to optimize “Kate Spade’s supply chain network.”

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