Coach's Aquisition of Kate Spade is Final

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    Press Release
    Coach, Inc. Completes Acquisition of Kate Spade & Company

    NEW YORK--(BUSINESS WIRE)--Jul. 11, 2017-- Coach, Inc. (NYSE:COH) (SEHK:6388), a leading New York-based house of modern luxury accessories and lifestyle brands, today announced that it has completed the acquisition of Kate Spade & Company (NYSE:KATE) for $18.50 per share in cash for a total transaction value of $2.4 billion.

    The tender offer by a subsidiary of Coach, Inc. for all the outstanding shares of Kate Spade & Company expired, as scheduled, at 5 p.m. EDT on July 10, 2017. Following its acceptance of the shares tendered, Coach, Inc. caused the merger of its subsidiary with and into Kate Spade & Company. As a result, Kate Spade & Company has become a wholly owned subsidiary of Coach, Inc. In connection with the merger, all eligible Kate Spade & Company shares not tendered have been canceled and converted into the right to receive $18.50 per share in cash, the same price per share offered in the tender offer. In addition, all Kate Spade & Company shares will cease to be traded on the New York Stock Exchange as of July 12, 2017.

    Strategic Rationale

    The combination of Coach, Inc. and Kate Spade & Company creates 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. Coach’s history and heritage, multi-channel, international distribution model, and seasoned leadership team uniquely position it to drive long-term sustainable growth for Kate Spade.

    Transaction Details

    As previously announced, the $2.4 billion purchase price has been funded by a combination of senior notes, bank term loans and excess Coach cash.
     
    Hobbsy likes this.
  2. :huh: So that's where all our money went...

    In all seriousness though, what do you think this means for KS and Coach? Does anyone know how this 'combination' will happen and on what timeline? I'm really curious since I have both stores near by, outlet and regular. Is Coach going to start bedazzling pink flamingos now? :hrmm:
     
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  3. #3 Jul 11, 2017
    Last edited: Jul 12, 2017
    I do not think that would happen. I think their intention is to keep them quite separate. While they do have some crossover customers (I am one of them) they really do have different vibes/appeal to different groups on a larger scale. I expect Coach will be trying to stop Kate Spade from moving further toward where Coach was not that long ago...that rep of being oversaturated, and compromising on quality (ie less surprise 70% off sales)

    From what I recall, Coach does not even really want people to know they own KS. Which is doable except for those in the know or who follow these things. Consider how many luxury bag brands are under LVMH....how many "average" people would know that LV, Givenchy, Celine, Fendi, Marc Jacobs (plus a few more) are all under LVMH? I mean, these forums could just put those (along with Loewe, etc) under one "LVMH" heading but consumers and the powers that be here still still see them as unique & separate brands.

    ETA: found the source for my comment about not wanting customers to know they own KS: http://www.cnbc.com/2017/05/08/coach-ceo-says-he-doesnt-want-consumers-to-know-it-owns-kate-spade.html
     
  4. Thanks for sharing this info, very interesting. Things that stand out to me are that they 'see only a 10% customer overlap' which is REALLY surprising to me. Probably because, as I've mentioned, they're both all over the place here. Also makes the video headline 'Coach snags handbag rival' kind of funny. I wonder if they'll try to hire a new revolutionary creative director for KS (or if they already picked someone out?). The other thing is that it says Coach plans to evolve into a company like LVMH which makes sense given their behavior but I wonder how good these luxury conglomerates are for us as consumers money/quality/choice wise
     
    katev likes this.
  5. Hard to say, but I do not think KS is lacking on the actual creative aspect for their market, which as that article points out is mostly millenials. If anything they need to tone back on the creativity...they release new lines monthly, including whimsical pieces. Some of which I think hit the mark (their own t-rex/dino stuff, the seahorses (but I admit bias there as I love scuba!)) and others which for me are a big miss (taco trucks....) but I assume appeal to others. But it seems something has barely even had time to grab attention before they have cycled into something new. They have also traditionally made good quality MFF pieces, like not really downgraded quality for MFF which is something a lot of brands could learn from. KS is know for its whimsy, and perhaps less timeless but certainly fun pieces, and I don't think Coach would be wise to mess with that, minus maybe refining it. I love both my Coach (all 1941) and KS stuff, but for different reasons, for sure.
     
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  6. Wow. Wow. During my 2017 Christmas shopping, I checked into Kate Spade jewelry and accessories, which I used to LOVE, especially on their sales. I would buy *many* and save them for bday, Christmas gifts all year 'round. This year was a big MEH, which was a little disappointing, and I was a little surprised. But I thought maybe my tastes are just becoming "more mature." At the time, I didn't know at the time that Coach had acquired KS.

    Then two weeks ago I bought a KS bag online on sale for about 1/3 original retail price, and thought I got a huge bargain. As I was enjoying my purchase and reading about Kate Spade, I searched online and learned she has NOTHING to do with the company anymore and has not for about 10 years! I had erroneously believed she was the creative genius behind all the cool bags and accessories I'd collected over the last 4-5 years, a cool Catholic American whimsical, feminine designer genius.

    THEN I read that soccer-mom COACH had acquired the full KS company. Jolt. Then the dots joined themselves. The newer Coach products are not the same as the older KS ones. They don't have the same look-and-feel. That unique slightly-vintage whimsy is gone. The fascinating and irrepressible charm is gone - or at least fading very fast. I the recalled that I did notice more reviewers commenting that the dust bag was not included. And the bag I just bought was not lined - which I thought was a new, hip thing when I purchased it. Now I realize it's just another drop in quality. Getting less for the same price. Not sure if I *ever* saw a KS bag without a lining, but maybe I missed something.

    Then my super-analytical mind decided to check into the 14-K plated hardware. I looked at a few newer bags, and sure enough, no mention of gold plating in the "Details" section. Whoa.

    I felt like an investigative reporter and wanted to make sure I had my facts straight, so I chatted with Customer Service. Sure enough, they confirmed that Kate Spade no longer does gold-plating on hardware.

    HUGE DROP IN QUALITY.

    I couldn't help it, so I chatted back that this was probably the Coach effect, a big drop in quality. LOL

    So there you have it. Soccer-mom Coach has cheapened Kate Spade to just another Michael Kors - slightly cuter perhaps. I noticed most of the jewelry also was missing the gold plate. Perhaps not all, just the lower priced stuff that was in my price range.

    Horrible product decision. I would have preferred a slight increase in price to maintain the gold plating. Gives the brand that extra zing, sparkle and makes me feel like I made an investment purchase. No longer. Congrats, Coach. You have ruined KS.

    BTW, Kate Spade the woman has changed her name to Kate Valentine. She has released a new brand "Frances Valentine." The bags do feel a bit more casual and mature, less cutesy. The shoes are to die for and priced as such.

    IMHO Frances Valentine is marketing to the boutique crowd, but not the Millennials. In bags it looks a little more casual and comfortable with high quality. In shoes it does look very premium and distinctive Kate Spade flair - perhaps even more high-end than before. Not daily-wear shoes - but statement shoes - some. Some shoes are more the comfort look.

    I felt a great loss for Kate Spade, but I'm o.k. because trying to move away from leather. There's a lot of very cruel torture of especially young animals to produce the millions of bags on the market each and every season.

    No, Virginia, these are not meat by-product bags. This is a lie. There are cows skinned alive (and young calves) for leather bags. If you sew, you know how much fabric is required for a full piece of leather as with these bags.

    I'm going for plastic and lower prices.

    I really hope someone (besides $tella McCartney) will take up the vinyl handbag space with some really cute and practical bags. No, I'm not willing to pay $200-300 for plastic, but I will pay closer to $100 if for a good cause and an awesome handbag.

    Happy New Year to all!
     
  7. I'm not even sure why the drop in KS has anything to do with Coach; to be honest, some of the bags I purchased from them were already not the best quality, and that was a few years before the acquisition deal.
     
    Hobbsy, whateve, Sarah03 and 4 others like this.
  8. “Soccer mom Coach”? Have you looked at the brand lately?
    Certainly a reason for bringing up an old thread - please go to coach.com and check out their wonderfully sleek offerings - they are even doing custom work now. It’s amazing.
    But wait - you’re moving away from leather ... plastic and PVC is your game now. I think?
    Anyway, thanks for sharing! :smile:
     
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  9. Oh, I do like their vintage line that I saw recently - half year ago at Nordies Half-Yearly
    .
    I guess I'm referring more to the huge disappointment re: KS changes. If you haven't been a big KS fan, they may not seem as relevant. I was, and the changes are big. Declining from 14-karat gold plated hardware to not, is significant. I looked at some jewelry after my post above, and Customer Svc also confirmed the earrings that were previously real gold were no longer.

    Sorry, I don't like most of Coach's designs - as of 1-2 years ago. Some are ok, but they just don't appeal to me as much. Different look. I'll check it out just out of curiosity with everyone's running to Coach's defense. Yeah, I'm going plastic.

    Happy bags whatever your preference!
     
  10. My SIL was a huge Kate Spade fan and according to her, the quality took a nose dive several years ago. I had 2 bags made around 2012-13 and gave them away within 6 months. To me, the quality was below Michael Kors. I had barely used them and they were already looking kind of junky. I doubt I will ever purchase anything KS again.

    Also, with the plastics just be careful what companies you purchase from. The amount of waste, toxins, harmful working conditions of employees is just terrible. Just because it is plastic, it doesn't make it "cruelty free". There are always local leather makers in the US who craft beautiful pieces. They actually do tan leather from animals that have been (as humanely as possible) slaughtered for meat from local farms. I refuse to buy meat/dairy from chain grocery stores. Every thing my family eats comes from local farms where I can go and see how great the animals are treated. Now, if I could only stop buying brand name leather bags/shoes.
     

  11. I find it interesting that you blame Coach for your disappointment in KS products. Coach just purchased Kate Spade six months ago, they have yet to even put out a product line produced by this new joint effort.

    As for your negativity towards Coach, I could argue some points but IMO based on your comments from “soccer-mom Coach” to the comment of “Nordies half-yearly” sales, I won’t waste my time.

    For the record though, I’m very happy for you that you found your passion in the sales of plastics. If it’s one thing we truly enjoy in this blog, is the love and passion we share when we find our “true” love of a product regardless of brand, history, shape, color etc... we each have our own taste but it’s fun to see/hear when one of us finds this happiness!
     
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  12. #12 Jan 14, 2018 at 11:50 AM
    Last edited: Jan 14, 2018 at 11:56 AM
    At this point in the acquisition, Tapestry (the holding company) is still way in the weeds with structuring and organizing Kate Spade. It will take a least a year for production/organizational changes to take effect.

    Whatever issues you are having with Kate Spade are Kate Spade's own doing. The drop in quality simply cannot be attributed to Tapestry (formerly Coach, Inc.) at this point. They are the results of mismanagement that happened at Kate Spade within the last 2-5 years.

    I don't know how you think absorbing a multi-million dollar lifestyle company works, but Tapestry (Coach, Inc.) in NO way has the control over quality, design, production, product launch, in-store service, and marketing that they would really like to have at this point. It'll take a solid year for Tapestry to identify and implement changes, and it may take another 6-10 months after deciding on what those changes are for them to be observable from a consumer standpoint.

    From what I can see at this point, from my perspective of experienced retail consumer and someone who once worked in luxury fashion, is that Tapestry's priority with Kate Spade right now is liquidating (clearancing) the "cheapened" Kate Spade inventory that was designed and produced by Kate Spade before Tapestry had any influence on the brand. And then Kate Spade can begin releasing new product that is up to the standards of a Tapestry brand.

    I think if your super-analytical mind did a little research on this forum, you'd notice that Coach is pretty much the only designers pushing out top-quality leather bags that are lined in premium leather or bags with exotic or artisan embellishment for a mere fraction of what other designers would ask for a bag with worse quality and less premium detailing.

    So there you have it.

    And Happy New Year to you, too!
     
  13. well said
     
  14. I agree, Kate Spade quality has been terrible for at least the last several years. I started buying Kate Spade around 2012. I have a tote I like. Two bags I bought around that time I sold almost immediately. They didn't feel luxe and weren't comfortable to carry. In 2014, I bought a really cute owl coin purse, but it fell apart with only a little use. I have Coach items from many years ago, even some from the 60s, that are still in very good condition. Since then, I've been afraid to buy anything from Kate Spade except for jewelry.

    I stay away from plastics. There is outgassing that is toxic.
     
  15. I am a KS fan for some of their designs, as well of Coach's; the drop in KS quality has happened years ago, and that's why I don't understand why you'd attribute it to the acquisition deal. And that soccer-mom thing is really not a recent Coach image; if anything, I'd say the Coach quality has picked up lately, with leather lining, durable hardware (as long as it's not black copper), and some rather sleek looks. If Coach had any control over KS yet, I would have expected to see an improvement on KS products' durability. One can be disillusioned with the recent development in one brand, without pointing fingers at another; valid or not, the negative developments are still too early to associate to an acquisition that's still in its early stages of infancy.