Coach's financial advisor on the Kate Spade deal is Evercore Group LLC and its legal advisor is Fried, Frank, Harris, Shriver & Jacobson LLP. For Kate Spade, Perella Weinberg Partners LP is serving as financial advisor, while its legal advisor is Paul, Weiss, Rifkind, Wharton & Garrison LLP. A third-quarter close is expected for the acquisition.

NEW YORK CITY—Coach Inc., widely seen as the front-runner for a purchase of Kate Spade & Co., said Monday that it would do just that. The two luxury accessory brands will combine in an all-cash transaction valued at $2.4 billion. Shareholders in Kate Spade will receive $18.50 per share, representing a 27% premium on the brand's closing price as of this past Dec. 27, the last trading day before media reports speculated on a sale of the company.

“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,” says Victor Luis, Coach's CEO. “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.” Luis adds that Kate Spade's following is especially strong among the coveted Millennial demographic.

The deal follows Kate Spade's announcement earlier this year that it was exploring strategic options. CEO Craig A. Leavitt says that “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.” Other Coach portfolio brands include Stuart Weitzman, which was acquired for approximately $574 million in 2015.

Coach has plans to take some pages from its own playbook, which saw it scale back on department-store distribution and discounting. Similarly, says CFO Kevin Wills, “We plan to reduce sales in Kate Spade's wholesale disposition and online flash sales channels. Therefore, the reduction in profitability from the pullback in these channels will be offset by the realization of these substantial synergies.”

Coach's financial advisor on the Kate Spade deal is Evercore Group LLC and its legal advisor is Fried, Frank, Harris, Shriver & Jacobson LLP. For Kate Spade, Perella Weinberg Partners LP is serving as financial advisor, while its legal advisor is Paul, Weiss, Rifkind, Wharton & Garrison LLP. A third-quarter close is expected for the acquisition.