LONDON (CBS SF/AP) — In a bid to burnish its brand image, American bag and accessories maker Michael Kors is buying luxury shoemaker Jimmy Choo in a deal worth £896 million pounds ($1.35 Billion).
Jimmy Choo, which counts Jennifer Lopez, Duchess of Cambridge Kate Middleton and Beyonce among its fans, has a high-level profile that tempted Michael Kors to pay a premium.READ MORE: COVID Surge: Mask Mandate Returns To Bay Area Businesses With No Limits On Capacity
Shareholders in Jimmy Choo will get 2.3 pounds in cash for each share, about 36.5 percent above the firm’s share price of 1.685 pounds on April 21.
Michael Kors has struggled recently, announcing in May that it would close up to 125 stores due to weak sales.
It said that Jimmy Choo is “the ideal partner” and will have its online presence bolstered as a result of the deal. Jimmy Choo CEO Pierre Dennis and Creative Director Sandra Choi will remain in their jobs.
“Jimmy Choo is poised for meaningful growth in the future and we are committed to supporting the strong brand equity that Jimmy Choo has built,” said John Idol, CEO of Michael Kors.READ MORE: Firefighters Battling 2-3 Acre Wildfire In Lake County
Analysts from Jefferies said the deal could help Michael Kors rebuild its brand name, though that would happen in the longer-term and not have an immediate impact on the company’s stock.
“We believe the strategic steps Kors is making to elevate its own brand are working, and believe the addition of Jimmy Choo, an iconic premium luxury brand, should be beneficial,” the analysts said in a note to clients.
Shares in Jimmy Choo were up 17 percent at 2.28 pounds on Tuesday, while Michael Kors was down 2.5 percent at $34.MORE NEWS: UPDATE: Shooting Shuts Down EB Highway 4 In Antioch
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