New-York based luxury accessories and lifestyle brands retailer Coach has signed a definitive agreement to acquire Kate Spade & Company in a $2.4bn transaction.

As per the terms of the transaction, Kate Spade shareholders will receive a cash payment of $18.50 a share.

It is reported that the deal has the unanimous support of the boards of directors of Kate Spade & Company and Coach.

Coach CEO Craig A. Leavitt said: “Following a thorough review of strategic alternatives, reaching an agreement to join Coach’s portfolio of global brands will maximise value for our shareholders and positions Kate Spade for long-term success as we continue our evolution into a powerful, global, multi-channel lifestyle brand.”

Coach chief financial officer Kevin Wills added: “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.”

Coach is planning to reduce sales in Kate Spade’s wholesale disposition and online flash sales channels in order to ensure the long-term viability and health of the Kate Spade brand, according to Wills.

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The agreement has been reached in order to create a leading luxury lifestyle company with a more diverse multi-brand portfolio supported by significant expertise in handbag design, merchandising, supply chain and retail operations, as well as solid financial acumen.

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

Not subject to a financing condition, the transaction is expected to close in the third quarter of this year subject to customary closing conditions and receipt of required regulatory approvals.

Evercore Group and Fried, Frank, Harris, Shriver & Jacobson served as Coach’s financial and legal advisers respectively.

Kate Spade & Company’s financial and legal advisers are Perella Weinberg Partners and Paul, Weiss, Rifkind, Wharton & Garrison respectively.