Coach Buys Kate Spade for $2.4 Billion

Old school and new school are coming together. Coach, the longtime maker of luxury leather handbags, is snapping up the relatively young fashion and accessory brand Kate Spade New York for $2.4 billion in a bid to create a combined company that can appeal to a broader number of people.

The pairing might seem a little strange at first. Coach and their famous leather handbags look relatively austere to what we’ve seen from Kate Spade — typically, brighter colors and more cutesy, irreverent touches. Kate Spade has also been the more tech savvy brand, with designs lent to loads of smartphone cases and smartwatches in recent years.

But, that difference in design is at the heart of the acquisition. The joint press release indicates that Coach won’t interfere much with Kate Spade New York’s design work — preserving the brand’s quirkiness and appeal to the younger crowd will improve Coach’s overall financial performance, something that won’t happen if they start tinkering and turn off Kate Spade fans. What Coach will do is use their distribution know-how to get Kate Spade into more markets abroad.

That doesn’t mean those Kate Spade fans here should expect no changes at all. In recent years, Coach has seen their brand viewed as cheaper because of discounts and wide availability — they’re in the process of reestablishing themselves as a luxury brand, and charging more money for their handbags because of it. It’s possible they could take the same approach with Kate Spade, although seeing as how they’ll continue to run Kate Spade as a separate brand, they may not necessarily feel the need to use the same strategy.

Via Reuters