Coach makes offer on Kate Spade
Select language to see a machine translation of this article. The original language of the Article is English and the translation is provided for your convenience.

Coach makes offer on Kate Spade

Luxury fashion company Coach made an offer last week to acquire handbag and accessory maker Kate Spade. Speaking on condition of anonymity to CNBC, three people claimed that the latter company would mull the offer over for the next few weeks before engaging further. They also added that Coach was not the only company interested in Kate Spade, and that there was a possibility negotiation could end without a deal being made.

Coach’s share price is up 13% so far this year

coach gph

SOURCE: Yahoo Finance

The benefits of an acquisition of Kate Spade include greater pricing power and a younger clientele. And for that very reason, Coach isn’t the only big name involved in talks. Michael Kors, who (along with Kate Spade and Coach) neglected to comment, is also lined up as a potential buyer.

Kate Spade could offer Coach a solution to the problem of brand dilution. Coach’s rapid expansion into new retail territories has come hand-in-hand with a loss of exclusivity – now that you can get Coach products easily, some of the “magic” has worn off.  Kate Spade’s entryway into other price points and provision of a whole new audience could help Coach solve that. But, with a market cap of $2.9 billion, is it worth the price tag?

Disclosure

Dominion holds Coach in its Global Trends Luxury Fund.


If you would you like to receive the Newsfeeds daily, please click here to sign up now!

Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
0.0/5 rating (0 votes)

Disclaimer
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.