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Coach acquires Kate Spade for US$2.4 billion, eyes Millennial crowd

Luxury brand Coach is looking to acquire Kate Spade & Company.  Victor Luis, chief executive officer of Coach said the acquisition was due to Kate Spade having a “truly unique and differentiated brand positioning” with a broad lifestyle assortment and strong awareness among consumers, especially Millennials.

Under the terms of the transaction Kate Spade shareholders will receive US$18.50 per share in cash for a total transaction value of US$2.4 billion. Through this acquisition, Coach will create the first New York-based house of modern luxury lifestyle brands, defined by authentic, distinctive products and fashion innovation.

“In addition, we believe Coach’s extensive experience in opening and operating specialty retail stores globally, and brand building in international markets, can unlock Kate Spade’s largely untapped global growth potential. We are confident that this combination will strengthen our overall platform and provide an additional vehicle for driving long-term, sustainable growth,” he added.

Luis added that the acquisition of Kate Spade is an important step in Coach’s evolution as a customer-focused, multi-brand organisation.

“The combination enhances our position in the attractive global premium handbag and accessories, footwear and outerwear categories, bringing product, brand positioning and customer diversification to the portfolio, and establishing scale in key functions with the resources to invest in talent and innovation. In addition, we believe the Kate Spade brand will benefit from our best-in-class supply chain and strong corporate infrastructure,” he said.

Craig A. Leavitt, chief executive officer of Kate Spade & Company, 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.”

He added the brand is now looking to leverage on Coach’s expertise across the business and “innovate and build long-term loyalty” with consumers, all while expanding across product categories and geographic axes of growth.”

Kevin Wills, Coach’s chief financial officer, added that 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, there will be a reduction in Kate Spade’s wholesale disposition and online flash sales channels. As a result, there is an expectation that the acquisition reach double-digit accretion by fiscal 2019.”

Recently, Coach promoted Ian Bickley, to the role of president, global business development and strategic alliances. He was previously president, International group for the Coach brand. In his last role, he was responsible for all international direct retail businesses and oversight for Coach’s International wholesale and distributorship businesses around the world, which today account for more than 200 locations in over 20 countries. In addition, he was responsible for the development of all new and emerging markets globally.


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