Unanimously approved by the Boards of Directors of Kate Spade & Company and Coach Inc, the total transaction value stands at US$2.4 billion, which is not subject to a financing condition and is expected to be funded by a combination of senior notes, bank term loans and approximately US$1.2 billion of excess Coach cash, a portion of which will be used to repay an expected US$800 million 6-month term loan.

“The combination of Coach, Inc. and Kate Spade & Company will create a leading luxury lifestyle company with a more diverse multi-brand portfolio supported by significant expertise in handbag design, merchandising, supply chain and retail operations as well as solid financial acumen”, said a statement.

Through its history and heritage, multi-channel, international distribution model, Coach aims to drive long-term sustainable growth for Kate Spade and says it is focussed on preserving Kate Spade’s brand independence as well as retaining key talent, ensuring a smooth transition to Coach Inc.’s ownership.

Sales for the Coach brand totalled US$915 million for the third fiscal quarter, representing a decrease of approximately 4% on a reported and constant currency basis, as the planned strategic actions in the North America wholesale channel are said to have negatively impacted sales growth. Read more here.