Michael Kors buys Jimmy Choo in £896m deal

Michael Kors handbags in a store in Paris

The London-based shoes and accessories company which became popular in the '90s, has been acquired by Michael Kors for $1.2 billion following a decline in sales in the last couple of years.

USA fashion retailer Michael Kors Holdings Ltd (NYSE:KORS) has snapped up United Kingdom luxury shoemaker Jimmy Choo for US$1.2bn.

"Pierre Denis will continue in his role as Chief Executive Officer of Jimmy Choo". Michael Kors competes in the very competitive affordable luxury retail segment.

Additionally, the USA retailer has also explained that the said offer is "final and will not be increased" unless another party makes an offer. Michael Kors' shares sank more than 4 percent, as some on Wall Street anxious the deal may add to the retailer's own struggles of late.

Jimmy Choo shares were up 16.79% in the first hour of trading at 227.75 pence in London. Michael Kors expects the transaction to close during fourth-quarter 2017.

The news comes less than three months after Coach (coh) announced its $2.4 billion deal to buy Kate Spade, a purchase that closed recently, and shows how urgently companies that rode the big handbag boom of a few years ago need to find new sources of growth.

One of America's best-known fashion retailers has agreed to take over luxury shoe brand Jimmy Choo in an £896m deal, reports Sky News.

Jimmy Choo was made available for sale in April after its holding company JAB made clear its intentions to focus on the consumer rather than the luxury market.

Shares in Michael Kors fell 1.37% to US$34.43 in U.S. pre-market trading.

"A combination with Michael Kors will allow Jimmy Choo to embark on its next phase of growth and provide opportunities for the benefit of Jimmy Choo customers, employees, shareholders and other stakeholders", Peter Harf, the Jimmy Choo chairman, said in a news release.

Goldman Sachs and JPMorgan acted for Michael Kors on the deal, while Merrill Lynch, Citigroup, Liberum and RBC Europe represented Jimmy Choo.

Jimmy Choo has about 150 company-operated retail stores, 560 multi-brand locations and over 60 franchise stores in premier locations worldwide. "We look forward to welcoming Jimmy Choo to our luxury group".

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