High-end fashion retailer Coach has agreed to buy Kate Spade in a $2.4B deal to unite their brands and push for growth together in today’s tough retail environment.
Coach will pay a 28% premium on Kate Spade’s Dec. 27 closing price, paying shareholders $18.50/share, the Wall Street Journal reports. The deal comes after a key activist investor pushed Kate Spade to sell the company in November, and in late December Kate Spade said it was actively seeking a sale.
Coach CEO Victor Luis said the deal will unlock Kate Spade’s global growth potential, and many experts think the deal is appropriate considering the two brands’ product alignment. Both companies have struggled in today’s retail environment, which has proven difficult for luxury brands with exposure to department stores and those that rely on foreign customers.
The deal is subject to shareholder and regulatory approval, and both companies have the option to terminate the transaction if it is not complete by Feb. 7.
