Coach and Kate Spade agree to major merger

Major mergers and acquisitions have not made very many headlines this year, but the luxury handbag market is about to experience a shakeup of major proportions. Coach announced that it will buy Kate Spade in a $2.4 billion deal.

According to a recent report, the famous luxury handbag maker will buy its major competitor in a deal that is expected to boost Coach’s profitability. The company hopes to generate $50 million in savings each year by combining Kate Spade’s and Coach’s inventory management and supply chains. Further, both companies hope to expand their international presence, even though a majority of their sales originate in the U.S.

Some may see the deal as a way for Coach to reinvigorate its brand which arguably has lost some of its luster since peaking in 2013. CNN reports that revenue fell in 2014 and 2015. The same could be said for Kate Spade, as shares hit a three-year low in 2016.

The story exemplifies the need for experienced legal counsel to analyze major mergers and acquisitions to review a number of facets affecting the two companies. After all, these purchases often involve current and potential lawsuits affecting a particular company, as well as contractual obligations that a buyer may not want to deal with after the purchase is completed. Further, large mergers must meet legal scrutiny from an anti-trust perspective.

It remains to be seen whether any of these will hamper the Coach-Kate Spade deal. In the meantime, an experienced business law attorney can advise you as you prepare for a major business deal.  

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