Coach closes acquisition of Kate Spade for $2.4bn


American luxury retailer Coach has completed the previously announced acquisition of Kate Spade & Company for $2.4bn.

The development comes after Coach’s subsidiary Chelsea Merger Sub completed its tender offer for all of the outstanding shares of Kate Spade at $18.50 a share.

Kate Spade will now operate as a wholly owned subsidiary of Coach, which intends to drive long-term sustainable growth for the company.

An agreement in relation to the acquisition was signed between the fashion retail companies in May.

"We believe that we can realise a run rate of approximately $50m in synergies within three years of the deal closing."

The merger will see the formation of a luxury lifestyle company with expertise in handbag design, merchandising, supply chain and retail operations, leading to a more diverse multi-brand portfolio.

During the signing of the agreement, Coach chief financial officer Kevin Wills said: “Due to the complementary nature of our respective businesses, we believe that we can realise a run rate of approximately $50m in synergies within three years of the deal closing.

“At the same time, to ensure the long-term viability and health of the Kate Spade brand, and similar to the steps Coach has itself taken over the last three years, we plan to reduce sales in Kate Spade’s wholesale disposition and online flash sales channels.”

The acquisition is set to consolidate Coach’s position in the handbag, footwear and outerwear categories.

In 2015, Coach acquired designer footwear company Stuart Weitzman.


Image: A Kate Spade New York store. Photo: courtesy of Paul Keleher via Wikipedia.