By Jonathan Lee
In an attempt to polish its image, handbag maker Michael Kors Holdings Limited announced Tuesday that it will acquire London-based shoes and accessories label Jimmy Choo PLC for $1.35 billion.
The boards of directors of both companies have approved the transaction, according to a company statement. Under the terms of the deal, Jimmy Choo shareholders will receive 230 pence per share.
Founded in 1996 by Malaysian fashion designer Jimmy Choo and former British Vogue editor Tamara Mellon, the company has more than 150 stores worldwide. Famous customers of the luxury brand include the late Princess Diana, Sarah Jessica Parker (and her fictional counterpart, Carrie Bradshaw, in “Sex and the City”), Michelle Obama, Kate Middleton, Beyoncé and Jennifer Lopez.
“We are pleased to announce the acquisition of Jimmy Choo, an iconic brand with a rich history as a leading global luxury house,” Michael Kors Chairman and CEO John Idol said in a statement. “Jimmy Choo is known worldwide for its glamorous and fashion-forward footwear. The company is a leader in setting fashion trends. Its innovative designs and exceptional craftsmanship resonate with trendsetters globally.”
Michael Kors has recently struggled, announcing in May that it would close up to 125 stores due to weak sales, the Associated Press reported.
“We believe that Jimmy Choo is poised for meaningful growth in the future and our company is committed to supporting the strong brand equity that Jimmy Choo has built over the last 20 years,” Idol said.
Michael Kors said it expects the acquisition to deliver numerous benefits for Jimmy Choo, including a $1 billion sales growth opportunity.
Jimmy Choo CEO Pierre Denis will remain at the head of the company. The brand delivered sales growth of 11 percent per year under his leadership since 2012.
“We are convinced that there is so much more that can be delivered in the years ahead,” Denis said. “We look forward to working closely with the leadership and team at Michael Kors Holdings Limited to further develop our iconic brand. Our two companies share the same vision of style and trend leadership. Our luxury heritage is the foundation of Jimmy Choo and we will continue to bring our brand vision to consumers globally.”
Sandra Choi will also continue to lead the creative and design teams. She has been with the company from day one and has been the sole creative director since 2013.
Michael Kors, honorary chairman and chief creative officer, said: “We admire the glamorous style and trendsetting nature of Jimmy Choo designs. We look forward to welcoming Jimmy Choo to our luxury group.”
Jefferies analysts said the deal could help Michael Kors rebuild its brand name in the long term.
“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.
Jimmy Choo shares were up 17 percent on Tuesday, while Michael Kors was down 2.5 percent, the AP reported.