US handbag rivals in $2.4bn takeover deal

US handbag maker Coach is taking over rival firm Kate Spade in a $2.4bn (£1.85bn) deal.

New York-headquartered Coach has offered $18.50 per share for the younger company as it looks to create a multi-brand fashion group.

BBC News has reported that both businesses are seeing sales slide at department stores across the US, where their ranges are traditionally sold.

Following the acquisition announcement, shares in Coach leapt 4.6% while Kate Spade rose 8.2%.

Coach chief exec Victor Luis, who took the helm of the business in 2014, said the deal would give his company access to a “new customer segment”.

The Kate Spade brand has found favour with millennials. The firm’s handbags, retailing for between $150 and around $450, have subtle logos and quirky designs including bags shaped like cars or cats.

Coach and Kate Spade also sell clothing and shoes, although both are best-known for handbags.

Mark Altschwager, of financial services firm Robert W. Baird & Co., commented: “We like the complementary product assortments, complementary customer bases, potential for synergies.”

Coach was established in 1941 and Kate Spade in 1993 by journalist-turned-entrepreneur Kate Brosnahan Spade.