Coach to acquire Stuart Weitzman for $574 million

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Coach is kicking off 2015 with its first acquisition ever. The American leather goods company has entered into a definitive agreement to acquire Stuart Weitzman from its current owner, Sycamore Partners, both brands announced Tuesday. The news follows reports from last August that Sycamore was looking to unload Stuart Weitzman after its buyout of Jones Group. In the latest bidding war, Coach reportedly faced competition from Brown Shoe Co. and private equity firm Advent International Corp for the luxury shoe brand.

The winning deal? Coach will initially shell out approximately $530 million cash to Sycamore Partners, in addition to another $44 million, give or take, contingent upon "selected revenue targets" over the three years following the close of the transaction, per a release. But considering that sources expected Stuart Weitzman to be worth closer to $800 million, it appears that Coach is getting a pretty good deal.

Coach CEO Victor Luis said in a statement that "the size, scope and vibrancy of the Stuart Weitzman brand, along with the continuity of its management team, allows for a seamless transition to Coach ownership, as we continue to focus on Coach's brand transformation," adding that he plans to develop Stuart Weitzman globally and also benefit from the brand's "expertise in footwear development where they're proven leaders in fashion and fit."

"In Coach, we have found a strategic partner that respects our culture, and offers the scale, resources, and global business acumen to enable us to realize our full potential," said Stuart Weitzman, the brand's creative director and executive chairman.
While the acquisition is a bit of a surprising move for Coach, Stuart Weitzman's steady sales growth should help steady the company during the tumultuous revamp phase of its flagship brand.

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