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Coach launches tender offer to acquire Kate Spade for $18.50 per share

  • In a Friday filing with the Securities and Exchange Commission, Coach said its $18.50-per-share offer will expire on June 23, unless extended.
  • In the process of sealing a tender offer, another investor could potentially get involved in a hostile takeover, upping the offering price per share.
Coach Inc.
Source: WestportWiki

Coach has launched a formal tender offer to acquire its rival handbag maker, Kate Spade, for $18.50 per share in cash, the company announced Friday morning.

Earlier this month, Coach announced its plans to make a deal to buy Kate Spade for $2.4 billion, in an effort to make the brand a more appealing and broader "lifestyle assortment."

In a Friday filing with the Securities and Exchange Commission, Coach said its $18.50-per-share offer will expire on June 23, unless extended. A tender offer is an offer to purchase some or all of shareholders' shares in a corporation, with the price offered usually at a premium to the stock's current market price.

Coach's offer will be for all the outstanding shares of Kate Spade's common stock, with a par value of $1 per share, Coach said.

Kate Spade's stock closed Thursday at $18.42 a share and is down about 1.3 percent for the year-to-date period. Over the past 12 months, though, shares have fallen a more significant 16.4 percent.

In the process of sealing a tender offer, another investor could potentially get involved in a hostile takeover, upping the offering price per share.

As M&A rumors were stirring at the start of the year, Michael Kors was said to be another potential bidder for Kate Spade.

"Kate Spade has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers, especially millennials," Coach CEO Victor Luis said earlier this month about the partnership between the two.

The deal is expected to close in the third quarter of 2017 and add to adjusted earnings in fiscal 2018, Coach has said.

Coach shares were trading slightly higher Friday during premarket hours, following this announcement. Meanwhile, shares of Kate Spade were about unchanged.

Read more:
Coach, Kate Spade shares jump on news of $2.4 billion merger