Kate Spade may become the next hot acquisition- report

By Nicel Jane Avellana

Dec 02, 2013 11:50 PM EST

A Bloomberg report said fashion label Kate Spade could become the target for buyout companies and other retailers. Fifth & Pacific Cos, the owner of Kate Spade, said in October that it would sell the intellectual property of Juicy Couture while a report from the Wall Street Journal said various parties have also expressed interest to buy Lucky Brand. Once Fifth & Pacific Cos will divest these two units, the report said it will be able to concentrate on Kate Spade as its primary brand. Because of this, buyout firms and retailers may want to acquire the brand, Sun Trust Banks Inc said. Wedbush Inc said one possible bidder for the designer handbags maker is Coach Inc.

According to Bloomberg, sales for both Kate Spade's same-store and online operations have increased over 20% for 12 straight quarters. Brean Capital said private equity companies may want to acquire the label because it still has room for expansion in the US and worldwide. Sterne Agee Group Inc said the brand may even get more than Fifth & Pacific's current market value of USD 4 billion.

In a phone interview, Wedbush analyst Corinna Freedman based in New York told Bloomberg that absent Lucky and Juicy, Kate Spade presents "a much cleaner story." She added that there are a large number of potential suitors for the brand.

Formerly called Liz Claiborne Inc, Fifth & Pacific decided to change its name last year after JC Penney Co acquired its namesake brand. It started with over 30 brands in 2006, but Chief Executive Officer William McComb has narrowed down the firm's portfolio of brands to four this year. The remaining brands are Juicy Couture, Kate Spade, Lucky Brand and the jewelry line Adelington Design Group.

Fifth & Pacific agreed to sell Juicy Couture's intellectual property to Authentic Brands Group in a USD 195 million deal. 

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