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UPDATE: Coach to Acquire Luxury Designer Footwear Brand Stuart Weitzman from Sycamore Partners

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Coach, Inc. (NYSE: COH), a leading New York design house of modern
luxury accessories and lifestyle collections, today announced that it has
signed a definitive agreement with private equity firm Sycamore Partners to
acquire Stuart Weitzman Holdings LLC, a leading designer and manufacturer of
women's luxury footwear. The transaction will complement Coach's current
leadership position in premium handbags and accessories, while immediately
adding to the company's earnings as it continues to make meaningful progress
against its brand transformation announced earlier this year.

Victor Luis, Chief Executive Officer, Coach, Inc., said, "Stuart Weitzman is a
leading American luxury designer footwear brand with a solid growth trajectory
and further significant domestic and international development potential.
Importantly, the size, scope and vibrancy of the Stuart Weitzman brand, along
with the continuity of its management team, allows for a seamless transition
to Coach ownership, as we continue to focus on Coach's brand transformation.
Over the medium term, we look forward to advancing the Stuart Weitzman brand's
global development, especially by leveraging Coach's international
infrastructure and expertise in handbags and accessories. In addition, we look
forward to benefiting from the Stuart Weitzman team's expertise in footwear
development where they're proven leaders in fashion and fit. Our strong
balance sheet provides the flexibility to take advantage of this opportunity
while re-investing in our core business and continuing to maintain our
dividend at current levels."

Stuart Weitzman, Creative Director and Executive Chairman of Stuart Weitzman
Holdings LLC, said, “What an exciting beginning to the new year. People
Magazine has named our “Highland” the Trendsetter Boot of 2014, Life & Style
Weekly has recognized our “Nudist” as the ‘It Shoe' and the Celebrity Red
Carpet Shoe of 2014. And Coach has selected us as its first acquisition. In
Coach, we have found a strategic partner that respects our culture, and offers
the scale, resources, and global business acumen to enable us to realize our
full potential. We are excited to be working with the Coach team and
leveraging its strong infrastructure to help us drive efficiency and expand
our product mix to an even broader consumer base worldwide. We also look
forward to supporting the Coach team with our technical and merchandising
expertise in footwear."

Stuart Weitzman markets its products in fine specialty and department stores
worldwide and in its own retail stores in the U.S. and Europe. Stuart Weitzman
realized net revenues of approximately $300 million for the twelve months
ended September 30, 2014.

Over the last five years, Stuart Weitzman has experienced robust growth with
sales growing at a 10% compounded annual rate driven by distribution,
e-commerce and same store sales gains. Over the same period, the company has
gained increasing global recognition by being the choice of key celebrities;
with its iconic campaigns featuring Gisele, Kate Moss and Natalia Vodianova,
all photographed by Mario Testino. The company has developed a global
multi-channel distribution network including directly operated stores in the
U.S. and Europe, international licensed stores and shop-in-shops, and a
significant global wholesale business, with the brand currently available in
70 countries. Stuart Weitzman will continue as Creative Director and Executive
Chairman of Stuart Weitzman Holdings LLC, and together with Wayne Kulkin,
Chief Executive Officer of Stuart Weitzman, and their management team, remains
fully committed to the growth of the business.

Under the terms of the agreement, Coach will make initial cash payments of
approximately $530 million to Sycamore Partners. In addition, Coach will make
up to $44 million in contingent payments to Sycamore Partners upon the
successful achievement of selected revenue targets over the three years
following the closing of the acquisition.

Coach will finance the transaction with cash on hand or other sources of
financing available to the company in the credit and capital markets. The
acquisition is expected to be accretive to earnings per share, exclusive of
transaction-related charges including anticipated purchase accounting
adjustments and contingent payments related to the transaction, and is
anticipated to close by May 2015, subject to customary closing conditions,
including expiration of the Hart-Scott-Rodino Antitrust waiting period.

The financial adviser to Coach was Perella Weinberg Partners. Goldman, Sachs &
Co. and Citigroup Global Markets, Inc. acted as financial advisers to Sycamore
Partners.

Posted-In: News M&A Press Releases

 

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