Kate Spade & Coach Cordially Invite You...

-By Josh S | [email protected]


Kate Spade

&

Coach

Request your presence for the ceremony and celebration of their marriage

On the Date of Q3 2017

Subject to customary closing conditions, including the tender of a majority of the outstanding Kate Spade & Company shares pursuant to the offer and receipt of required regulatory approvals.

Investors have been speculating for months about a marriage of Kate Spade to a wealthy suitor. The stock started the year around $15 and rose to as much as $24 on speculation of a buyout and then dropped precipitously back to around $15, only to be bought out yesterday by Coach.

The sale process began last November when Caerus Investors, an activist Kate Spade investor, pushed for a sale and said the price should be around $25 a share based on 12 X EBITDA. The reported buyers were Michael Kors Holdings & Coach with eventually Coach winning out. The proposal is for Coach to purchase Kate at $18.50 per share in cash for a total transaction value of $2.4 billion. The transaction represents a 27.5% percent premium to the unaffected closing price of Kate Spade’s shares as of December 27, 2016, the last trading day prior to media speculation of a transaction.

Victor Luis, Chief Executive Officer of Coach, Inc. said, “Kate Spade has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers."

Coach believes that there will be a runrate of $50 million in synergies within three years of the deal closing based on operational efficiencies, improved scale and inventory management, and the optimization of Kate Spade’s supply chain network. Coach added that the acquisition will be accretive in fiscal 2018 on a non-GAAP basis,

Kate Spade recorded net income of $153 million or $1.18 per share from continuing operations. However, 2017 isn't off to as solid a start as 2016 as revenue dropped 1% and income before tax dropped to $3 million from $12 million compared to last year's first quarter.

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