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Michael Kors Acquires Jimmy Choo for $1.2 Billion

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About the deal

On July 25, Michael Kors (KORS) announced that it has entered into a definitive agreement to acquire Jimmy Choo (CHOO) for $1.2 billion, or 896 million British pounds. The company has also agreed to acquire Jimmy Choo’s outstanding debt of $20 million.

Michael Kors has agreed to pay $3 (230 British pence) per share to Jimmy Choo shareholders. This figure represents a 36.5% premium to Choo’s share price in April, when the company announced that it was looking for buyers, and an ~18% premium to the July 24 closing price of 195 pence.

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Michael Kors chairman and CEO John D. Idol stated that “we are pleased to announce the acquisition of Jimmy Choo, an iconic brand with a rich history as a leading global luxury house.” He added that “we believe that Jimmy Choo is poised for meaningful growth in the future and our company is committed to supporting the strong brand equity that Jimmy Choo has built over the last 20 years.”

Deal to close by the end of this year

Michael Kors’s and Jimmy Choo’s boards of directors have unanimously approved the transaction. The transaction is expected to close in the fourth quarter of 2017 and is subject to customary closing conditions.

Michael Kors has agreed to irrevocable undertakings in favor of the transaction with JAB Holding (Jimmy Choo’s largest shareholder), Jimmy Choo directors, and creative director Sandra Choi, who together represent 69.2% of Jimmy Choo’s outstanding shares.

The deal comes just two months after luxury rival Coach (COH) acquired smaller competitor Kate Spade (KATE) for $2.4 billion. Investors seeking exposure to KORS could consider the iShares Edge MSCI Multifactor Consumer Discretionary ETF (CNDF), which invests 1.5% of its portfolio in the company.

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