Coach is buying Kate Spade for $2.4 billion
Luxury retailer Coach announced on Monday it agreed to buy Kate Spade for $18.50 per share, for a total transaction value of $2.4 billion.
The combined company will create a "leading luxury lifestyle company" supported by "significant expertise in handbag design, merchandising, supply chain and retail operations," according to a statement.
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.
Shares for the handbag and accessories maker surged 8.1% in pre-market trading on 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 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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