Michael Kors takes over shoe­maker Jimmy Choo

Kuwait Times - - FRONT PAGE -

LON­DON: 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 $1.35 bil­lion (896 mil­lion pounds).

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. 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.

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 yes­ter­day, while Michael Kors was down 2.5 per­cent at $34.

“Michael Kors in­tends to ap­ply the ex­pe­ri­ences, in­fra­struc­ture and ca­pa­bil­i­ties that it has de­vel­oped as a com­pany over the course of its own world­wide growth as a lux­ury fashion brand to sup­port the growth of Jimmy Choo.” Michael Kors has se­cured the back­ing of Lux­em­bourg-based in­vest­ment firm and ma­jor­ity share­holder JAB Lux­ury, which holds 67.66 per­cent of Jimmy Choo.

The Lon­don-listed group will re­tain its cur­rent man­age­ment team in­clud­ing chief ex­ec­u­tive Pierre De­nis. “We be­lieve that 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 over the last 20 years,” said John Idol, chair­man and chief ex­ec­u­tive of Michael Kors.

The Lon­don-listed lux­ury shoe­maker had put it­self up for sale in April as part of a strate­gic re­view. The agreed takeover bid rep­re­sented a pre­mium of 36.5 per­cent on the clos­ing share price on April 21.

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