Kate Spade & Co. has been acquired by Coach Inc., the New York-based design house of purses, accessories and lifestyle brands.
Under the terms of the transaction, Kate Spade shareholders will receive $18.50 per share in cash for a total transaction value of $2.4 billion, according to a company statement. The transaction represents a 27.5 percent premium to the unaffected closing price of Kate Spade’s shares as of Dec. 27, 2016, the company said.
“Kate Spade has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers, especially millennials,” said Victor Luis, chief executive officer of Coach Inc. “Through this acquisition, we will create the first New York-based house of modern luxury lifestyle brands, defined by authentic, distinctive products and fashion innovation.”
The combination of Coach Inc. and Kate Spade & Co. will “create a leading luxury lifestyle company with a more diverse multi-brand portfolio,” the company said. The $2.4 billion purchase price is expected to be funded by a combination of senior notes, bank term loans and approximately $1.2 billion of excess Coach cash.
A portion of that cash will be used to repay an expected $800 million six-month term loan.
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