Coach to Buy Kate Spade in $2.4 Billion Deal

A statement released by Coach said the combined company will create a "leading luxury lifestyle company" supported by "significant expertise in handbag design, merchandising, supply chain, and retail operations."

The luxury retailer Coach announced on Monday that it agreed to buy Kate Spade for $18.50 a share, for a total transaction value of $2.4 billion.
The per-share acquisition price is 27.5% higher than Kate Spade's share price as of December 27, the last day of trading before deal rumors started affecting the stock price.
Still, it's 23% below a nine-month high of $24.10 reached February 27.
Shares for the handbag and accessories maker surged by 8.1% in premarket trading Monday, while Coach's stock was little changed.
"Kate Spade has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers, especially millennials," Coach CEO Victor Luis said in the release.
Kate Spade has been under external pressure to do a deal since November, when the New York-based hedge fund Caerus Investors sent the company's board a letter pushing for a sale.
"We have become increasingly frustrated by management's inability to achieve profit margins comparable to industry peers," Caerus' founder, Ward Davis, and managing partner, Brian Agnew, wrote at the time.

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