Handbag maker Coach said it would buy Kate Spade for 2.4 billion dollars as it looks to tap the smaller rival's popularity among millennials.
The 18.50 dollars per share cash offer represents a premium of 9 percent to Kate Spade's Friday close. Kate Spade's stock was trading above the offer price at 18.95 dollars premarket on Monday.
The stock has risen 17 percent since December 27, a day before the Wall Street Journal reported the company was looking to sell itself.
The collectionduring the Kate Spade & Jack Spade spring 2006 presentation September 14, 2005, in New York City. /VCG Photo
The deal is expected to close in the third quarter of 2017 and add to adjusted earnings in fiscal 2018, Coach said.
Reuters reported in April, citing sources, that Kate Spade would need a few more weeks negotiating a sale of the company after receiving an offer from Coach.
Coach expects to have a run rate of about 50 million dollars in savings within three years of the closing of the deal.
(Source: Reuters)
