Coach will spend $2.4 billion for Kate Spade, tying together two premier brands in the luxury goods sector in a bid to snare younger shoppers. Noting that crucial demographic, Coach CEO Victor Luis says in a company release Monday that Kate Spade has a "strong awareness among consumers, especially millennials." Coach will pay $18.50 per share of Kate Spade, a 9% premium to its Friday closing price of $16.97. It follows another recent millennial-minded deal on Coach's part: engaging Selena Gomez (and, it likely hopes, her 120 million Instagram fans) in a deal that will put her in Coach ads and across its social media, reports CNBC.
But the brand isn't just going younger, it's going luxe-er, reports the AP: Coach has made an aggressive push to polish its image as a purveyor of opulence, ending many of the promotions it had used to ramp up sales. To power future growth, it's begun to build an empire of luxury brands. In 2015, Coach acquired the high-end footwear company Stuart Weitzman. Last month the company hired Joshua Schulman, the president of Neiman Marcus's Bergdorf Goodman division, and put him in the newly created position as president and CEO of the Coach brand. In CNN Money's view, the acquisition is "bad news for purse-loving bargain hunters." It cites Coach's CFO as saying that Kate Spade will likely reel in the number of "online flash sales" it has. (Read more Kate Spade stories.)