Just three months after its largest shareholder announced it was up for sale, Jimmy Choo (CHOO) has found a buyer. Michael Kors (US:KORS) – the US-listed behemoth which also takes its name from its founder and lead designer – has agreed to pay a 37 per cent premium to the share price the day prior to the sale announcement. It has made a 230p all-cash offer totalling £896m. The market reacted well, sending the share price up 17.5 per cent on the day of the news.
German investment group JAB Holdings – which owns 70 per cent of Jimmy Choo – is backing the deal, as is the company’s own chairman Peter Harf. Mr Harf said a combination with Michael Kors would allow Jimmy Choo to embark on its next phase of growth and provide opportunities for the benefit of Jimmy Choo customers, employees, shareholders and other stakeholders.
But this is something the company has struggled to accomplish during its three years as a listed entity. Growing levels of competition and a shift in consumer tastes culminated in a 0.8 per cent dip in like-for-like retail sales growth at Jimmy Choo during 2016 which, along with declines in the wholesale business and costs associated with new openings, dragged pre-tax profits down by a fifth.
That said, the share price has benefited this year from improved sentiment for the luxury sector, particularly as the weak pound drives more tourists to London and helps deliver reported currency benefits for a number of global brands. A surge in M&A activity has also helped push individual stock valuations north. Just three months ago, conglomerate LVMH (MC.) agreed to shell out £10bn for the remaining stake it didn’t already own in Parisian couture house Christian Dior, while US handbag-maker Coach (US:COH) has agreed a $2.4bn (£1.8bn) takeover of accessories brand Kate Spade. By way of comparison, that last deal constituted a 27.5 per cent premium to Kate Spade's undisturbed share price.
