Coach Seals The Kate Spade Deal

Coach has sealed the deal with Kate Spade, buying its fellow American label for $2.4 billion, the house announced this afternoon.

“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, CEO of Coach, reports Businesswire. "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."

Founded in 1993, Kate Spade made a name for itself with its playful and insouciant accessories lines, soon expanding into shoes, stationery, eyewear, babywear, fragrances, and bedlinen. Luis believes that Coach, itself a stalwart of leather goods as well as its successful ready-to-wear lines headed up by Stuart Vevers, is perfectly placed to help move Kate Spade into more lucrative waters, with Coach's chief financial officer, Kevin Wills, saying that he believes Coach can "realise a run rate of approximately $50 million in synergies within three years of the deal closing".

"We believe Coach’s extensive experience in opening and operating specialty retail stores globally, and brand building in international markets, can unlock Kate Spade’s largely untapped global growth potential," he continued. "We are confident that this combination will strengthen our overall platform and provide an additional vehicle for driving long-term, sustainable growth.”

The rumour mill has been rife of late that Coach was circling another brand to buy. Speculation settled on Burberry last year, with Burberry rebuffing "multiple approaches" by Coach, the Financial Times reported at the time.