Coach launches offer to acquire

Coach has made it official.



The upscale handbag and accessories retailer launched a formal tender offer to acquire Kate Spade & Company for $18.50 per share in cash. Coach announced its plans to acquire the brand at the beginning of May, in a deal that has a total value of $2.4 billion.



In its filing with the Securities and Exchange Commission, Coach said its $18.50-per-share would expire on June 23, 2017, unless extended. The offer, which is for all the outstanding shares of Kate Spade's common stock, is subject to customary conditions to closing. In the process of sealing a tender offer, another investor could potentially get involved in a hostile takeover, which would increase the offering price per share.



The deal has been unanimously approved by the boards of both companies. Coach said expects to generate $50 million in annual savings in synergies within three years of the deal closing.



“These cost synergies will be realized through operational efficiencies, improved scale and inventory management, and the optimization of Kate Spade’s supply chain network,” said Kevin Wills, Coach’s CFO. “At the same time, to ensure the long-term viability and health of the Kate Spade brand, and similar to the steps Coach has itself taken over the last three years, we plan to reduce sales in Kate Spade’s wholesale disposition and online flash sales channels.”