Coach Inc. is getting closer to wrapping up its acquisition of Kate Spade & Co.
The group formally launched a tender offer for all outstanding shares of Kate Spade common stock, offering $18.50 in cash a share.
The offer is set to expire June 23 so long as Coach has received more than 50 percent of all outstanding stock by then. There are currently more than 12.6 million shares of Kate outstanding.
After months of speculation, Coach revealed earlier this month that it had agreed to buy Kate Spade for about $2.4 billion in cash. The boards of both companies approved the transaction.
Coach said at the time that Kate Spade will maintain brand independence as well as its key talent, including chief executive officer Craig Leavitt, in order to ensure a “smooth transition” of ownership.
Shortly after the announcement, Coach ceo Victor Luis remarked that the company was aiming to be a luxury operator based on “inclusiveness,” a possibly oxymoronical notion.
Luis also characterized Kate Spade as a young brand with growth opportunities as well as “unique positioning and brand attitude.” He noted Kate Spade’s whimsical, fun and fashionable positioning resonates, especially with a strong Millennial customer base.
“The size of the potential opportunity with Millennials as they age will be a key driver of organic luxury growth, globally,” Luis said.
Coach also sees an opportunity to realize about $50 million in synergies within three years of closing the deal. And pulling back Kate Spade’s distribution in the wholesale channel, namely off-price retailers, is expected to help the acquisition be accretive in fiscal 2018.
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