Coach says that it is company policy to not discuss on rumors of a takeover or merger despite how true it may be, but the company did say in March 2017 that there was an 80% chance that it would be acquiring Kate Spade.
The price of the move is yet uncertain, but industry experts are already saying that one should expect a target of higher than $2 billion. Such a move raised the price target of KATE stock to $27 a share.
Coach CEO Victor Luis said the company believes the company can be bigger than the brand of the same name, with the implication being that another industry giant would give it power over another major brand.
“The priority, we’ve said clearly, is terrific brands where we can leverage the Coach know-how, which is especially strong in our ability to develop brands both internationally and domestically,” he said. “We’ve done quite well in growing the Coach business across the world, especially Asia.”
Kate Spade & Co raked in $1.4 billion in revenue in 2016, while adjusted earnings before interest, taxes, depreciation and amortisation of $259 million for the year.
KATE stock is up 1.8% Monday, while COH stock grew 2.1% yesterday.