May 8 (UPI) -- Luxury handbag maker Coach Inc. announced Monday it will buy competitor Kate Spade & Company for $2.4 billion.
Kate Spade stockholders will be offered $18.50 per share in cash, a 27.5 percent increase over the company's stock price on Dec. 28, the day before media speculation about the sale began. The stock price was $18.37 per share on Monday. Coach said in a statement that it has received bridge financing for the acquisition, which is expected to close by the end of the third quarter. It added that Coach plans on "preserving Kate Spade's brand independence as well as retaining key talent."
While both companies specialize in handbags, each also offers accessories, shoes and clothing lines.
Coach products were must-have items in 2013, but sales have declined since. Kate Spade sales were at a three-year low in December, when rumors of a takeover began. Both companies sell their goods primarily in the United States.