Coach to Buy Kate Spade for $2.4B

Coach Inc.

CBJ — Handbag maker Coach Inc. will acquire Kate Spade & Co. for US$2.4 billion as it looks tap the smaller rival’s popularity among millennials.

The US$18.50 per share cash offer represents a premium of 9 per cent to Kate Spade’s Friday close. Kate Spade’s stock was trading above the offer price at US$18.95 pre-market on Monday.

The stock has risen 17% since Dec. 27, a day before the Wall Street Journal reported the company was looking to sell itself.

The deal is expected to close in the third quarter of 2017 and add to adjusted earnings in fiscal 2018.

Coach expects to have a run rate of about $50 million in savings within three years of the closing of the deal.