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Coach to Acquire Kate Spade for $2.4B

Coach to Acquire Kate Spade for $2.4B

Kate Spade engaged bankers to explore strategic alternatives, as reported by ExitHub earlier this year. Kate Spade shareholders will receive $18.50 per share in cash, representing a 27.5% percent premium to the unaffected closing price of Kate Spade’s shares as of December 27, 2016, the last trading day prior to media speculation of a transaction. The deal has been unanimously approved by the Boards of Directors of both companies and is expected to close in the third quarter of 2017, subject to customary closing conditions. Kate Spade operates principally under two global, multichannel lifestyle brands: kate spade new york and Jack Spade New York. The company’s four category pillars – women’s, men’s, children’s and home – span demographics, genders and geographies. Known for crisp color, graphic prints and playful sophistication, kate spade new york aims to inspire a more interesting life. The kate spade new york collection includes the Madison Avenue, Broome Street and on purpose labels. Jack Spade New York offers a timeless and versatile assortment of bags, sportswear and tailored clothing founded on the aesthetic of simple, purposeful design. The company also owns Adelington Design Group, a private brand jewelry design and development group. “Kate Spade has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers, especially millennials,” said Victor Luis, Chief Executive Officer of Coach. “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. We are confident that this combination will strengthen our overall platform and provide an additional vehicle for driving long-term, sustainable growth.” The Coach brand was established in New York City in 1941, and has a rich heritage of pairing exceptional leathers and materials with innovative design. Coach is sold worldwide through Coach stores, select department stores and specialty stores, and through Coach’s website. In 2015, Coach acquired Stuart Weitzman, a global leader in designer footwear, sold in more than 70 countries. “Following a thorough review of strategic alternatives, reaching an agreement to join Coach’s portfolio of global brands will maximize value for our shareholders and positions Kate Spade for long-term success as we continue our evolution into a powerful, global, multi-channel lifestyle brand,” said Craig A. Leavitt, Chief Executive Officer of Kate Spade. The deal is not subject to a financing condition. Coach has secured committed bridge financing from BofA Merrill Lynch. The $2.4 billion purchase price is expected to be funded by a combination of senior notes, bank term loans and approximately $1.2 billion of excess Coach cash, a portion of which will be used to repay an expected $800 million 6-month term loan. Coach’s financial advisor is Evercore Group LLC and its legal advisor is Fried, Frank, Harris, Shriver & Jacobson LLP. Kate Spade’s financial advisor is Perella Weinberg Partners LP and its legal advisor is Paul, Weiss, Rifkind, Wharton & Garrison LLP.]]>

Syck Amore: Landlords $SPG, $GGP JV to Take Over @Aéropostale for $243M

Syck Amore: Landlords $SPG, $GGP JV to Take Over @Aéropostale for $243M

The Wall Street Journal, and is subject to court approval. The move comes two weeks after rival Los Angeles-based teen clothing retailer American Apparel LLC (AA), one of the largest apparel manufacturers in North America, reportedly hired investment bank Houlihan Lockey to explore a sale of the company, which was founded in 1989 by its controversial former chairman and CEO Dov Charney. In February 2016, American Apparel itself exited bankruptcy and is now privately owned by its creditors under a financial restructuring plan whereby the company converted $230 million in a debt-for-equity swap. AA’s new owners include Standard General, Monarch Alternative Capital, Coliseum Capital, and Goldman Sachs Asset Management. Two years ago, Aéro tied the knot for a $150 million senior secured credit facility with New York private equity firm Sycamore Partners, in conjunction with a sourcing arrangement with Sycamore’s portfolio company MGF Sourcing. However, the deal with Sycamore came back to haunt Aéro. On May 4, 2016, Aéropostale took the next steps in its ongoing business transformation saga by filing voluntary Chapter 11 bankruptcy petitions, closing 113 U.S. locations and all of its 41 stores in Canada. Aéropostale, headquartered in New York City, has about 800 stores in the U.S. and Puerto Rico, and through licensing arrangements around the world, but its footprint is expected to still be reduced drastically. The first Aéropostale store was opened in 1987 by Macy’s in the Westside Pavilion Mall in Los Angeles. The store was the brainchild of R.H. Macy Co. Aéro posted 13 straight quarterly losses and reported a net loss for fiscal 2015 of $136.9 million, which are provoking severe liquidity constraints. The company also indicated that it failed to resolve a vendor dispute with MGF, which “is causing a disruption in the supply of some merchandise.” “Under normal conditions, we would be very optimistic about our potential for financial growth throughout the first half of 2016,” said Aéropostale’s CEO Julian Geiger earlier this year. “Regrettably, our short-term visibility is limited by our current vendor dispute.” Sycamore, with more than $3.5 billion in capital under management, specializes in retail and consumer investments. The firm’s portfolio includes Talbots, Stuart Weitzman, Nine West, Kurt Geiger, Coldwater Creek, Belk, Dollar Express, Hot Topic, and others. Sycamore was founded in 2011 by Stefan Kaluzny and Peter Morrow, who previously worked at San Francisco private equity firm Golden Gate Capital. Given Sycamore’s aggressive retail shopping spree, The New York Times once referred to the pair as, “no retail parvenus.” Although Aéropostale continues to struggle with falling sales, its rivals such as American Eagle Outfitters Inc (NYSE: AEO) and Abercrombie & Fitch Co (NYSE: ANF) have managed to turn around their businesses by controlling inventories and responding faster to changing fashion trends.]]>

@LVMH Buys Iconic Rodeo Drive House of Bijan for $122M, at Record $19.4k/PPSF

@LVMH Buys Iconic Rodeo Drive House of Bijan for $122M, at Record $19.4k/PPSF

The Rich. The sale price makes the deal “considerably ritzier” than Chanel’s purchase of its Rodeo store last year for $152 million, or $13,217 a square foot – then a retail record per square foot for California, said the Los Angeles Business Journal. The sale to LVMH is the latest high-profile deal on the Beverly Hills shopping street, which is home to luxury retailers such as Gucci and Prada. Louis Vuitton already has a store near the 6,287-square-foot Bijan building it purchased at 420 N. Rodeo Drive, the Los Angeles Times said. Rodeo Drive ranks second among the most expensive U.S. retail destinations, trailing only upper Fifth Avenue in Manhattan, according to Cushman & Wakefield. The property is fully occupied by Bijan, a world-class fashion house founded in 1976 by the late Iranian-American designer Bijan Pakzad. The exclusive boutique caters to the ultra-high-net-worth international shoppers by appointment-only. Bijan has successfully operated at the property for more than 40 years and is the longest-standing privately-owned designer house on Rodeo Drive. The Bijan building is one of the most-recognizable storefronts in retail. The renowned yellow Rolls-Royce Phantom and the yellow and black Bugatti Veyron (both Bijan limited editions) match the building’s façade and interior and have long been hallmarks of the internationally-acclaimed custom clothier. Born in Tehran in 1940, Bijan migrated to Los Angeles in 1973. His exclusive boutique on Rodeo Drive has been described as “the most expensive store in the world.” Among his clients, Bijan claimed to count five U.S. Presidents – both George Bush and his son, Barack Obama, Ronald Reagan, and Bill Clinton – and other world leaders such as Vladimir Putin, Tony Blair, and King Juan Carlos of Spain. He also dressed other fashion designers, such as Oscar de la Renta, Tom Ford, and Giorgio Armani, and high-profile Hollywood celebrities including actors Tom Cruise and Anthony Hopkins, as well as Walt Disney’s chairman and CEO Michael Eisner. Bijan’s fragrances for both men and women are known for their distinctive circular glass flacon with an open center and a dividing web. When half full, the fragrance fills two separate chambers, seemingly defying the law of gravity that liquid seeks its own level. One of these perfume bottles is featured in the permanent exhibit of the Smithsonian Institution. According to the 2001 Los Angeles Times Calendar Section, the Bijan Perfume and Fashion Business has brought in an estimated $3.2 billion in sales worldwide. Bijan has been married twice. His first wife was Sigi Pakzad, a Swiss-German whom he met while living in Europe in the 1960s. They had one daughter, Daniela Pakzad, and divorced when she was 17. His second wife was Irish-Japanese interior designer and model Tracy Hayakawa. They married in 1986 and divorced in 1995. They had two children together, Nicolas Bijan and Alexandra. She later remarried businessman David H. Murdock. In April 2011, Bijan suffered a stroke, which required emergency brain surgery, but never recovered and died two days later in Los Angeles. The House of Bijan lived on however, without losing its appeal. Holliday Fenoglio Fowler LP (HFF), a unit of HFF Inc. (NYSE: HF), represented the property sellers, reportedly Brooks Caddell Barton Trust and Dominium Management Corp. Dominium is one of the largest and fastest-growing affordable housing owners in the U.S. Brooks Cadell Barton, who died in 2013, was a senior executive at Coldwell Banker International Real Estate and Home Savings of America, after serving as managing publisher of the Hollywood Reporter. He then left the corporate world to become a shaman and spiritual teacher, opening a retreat in Ojai, Calif., and a school called Art of God. The HFF team was led by Marc Schillinger, Bryan Ley and Bill Fishel. “We are thrilled with the record pricing we were able to achieve on our client’s behalf,” Schillinger said. The sale of the Bijan building comes on the heels of the HFF-brokered sale of Runway Playa Vista, as well as high-street retail transactions on Melrose Avenue and Melrose Place, adding to the more than 4.7 million square feet of retail space that HFF has transacted on so far this year in the greater Los Angeles area.]]>