Luxury brand Coach has announced it will buy Kate Spade, the American handbag firm, in a $2.4bn (£1.85bn) tie-up.
The New York-based firm has offered $18.50 for each Kate Spade share, a premium of nine per cent of Kate Spade's closing price on Friday, and a 27.5 per cent premium on Kate Spade's share price when reports of the acquisition first emerged in late December last year.
The deal, which will close in the third quarter of 2017, is expected to deliver $50m in synergies to Coach within three years.
Victor Luis, chief executive of Coach, said: “Kate Spade has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers, especially millennials. Through this acquisition, we will create the first New York-based house of modern luxury lifestyle brands, defined by authentic, distinctive products and fashion innovation.
"In addition, we believe Coach’s extensive experience in opening and operating specialty retail stores globally, and brand building in international markets, can unlock Kate Spade’s largely untapped global growth potential."
Coach said it will be keeping Kate Spade as an independent brand and that it was committed to keeping key employees.