FILE - In this Friday, Nov. 27, 2015, file photo, shoppers wait in line outside a Coach factory outlet store at the Cincinnati Premium Outlets, in Monroe, Ohio. Coach is buying rival luxury handbag, clothing... (Associated Press) 
 
 FILE - In this Friday, Nov. 27, 2015, file photo, shoppers wait in line outside a Coach factory outlet store at the Cincinnati Premium Outlets, in Monroe, Ohio. Coach is buying rival luxury handbag, clothing and accessories company Kate Spade in a deal valued at $2.4 billion as it looks grab more millennial... (Associated Press) 
 
 FILE - In this Friday, Nov. 27, 2015, file photo, shoppers wait in line outside a Coach factory outlet store at the Cincinnati Premium Outlets, in Monroe, Ohio. Coach is buying rival luxury handbag, clothing and accessories company Kate Spade in a deal valued at $2.4 billion as it looks grab more millennial... (Associated Press) FILE - In this Friday, Nov. 27, 2015, file photo, shoppers wait in line outside a Coach factory outlet store at the Cincinnati Premium Outlets, in Monroe, Ohio. Coach is buying rival luxury handbag, clothing... (Associated Press) 
 
 NEW YORK (AP) — Coach will spend $2.4 billion for Kate Spade, tying together two premier brands in the luxury goods sector that have fought to snare younger shoppers. 
 
 Noting that crucial demographic, Coach Inc. CEO Victor Luis said in a company release Monday that Kate Spade has a "strong awareness among consumers, especially millennials." 
 
 Coach will pay $18.50 per share of Kate Spade & Company. That's a 9 percent premium to its Friday closing price of $16.97. 
 
 Coach has made an aggressive push to polish its image as a purveyor of opulence, ending many of the promotions it had used to ramp up sales. But to power future growth, it's begun to build an empire of luxury brands. 
 
 In 2015, Coach acquired the high-end footwear company Stuart Weitzman. 
 
 Last month the company hired Joshua Schulman, the president of Neiman Marcus's Bergdorf Goodman division, and put him in the newly created position as president and CEO of the Coach brand. Many took that as a step toward a new company structure with a number of distinct brands under one umbrella, with each brand chief reporting to Luis. 
 
 Schulman officially begins his job on June 5. 
 
 Kate Spade's stock surged more than 8 percent before the opening bell. ||||| In an effort to resonate more with younger consumers, handbag maker Coach is buying its smaller rival, Kate Spade & Co., for $2.4 billion, the companies announced on Monday, putting many M&A rumors to rest. 
 
 "Kate Spade has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers, especially millennials," Coach CEO Victor Luis said in a statement. 
 
 The deal is expected to close in the third quarter of 2017 and add to adjusted earnings in fiscal 2018, Coach added. 
 
 Shares of Kate Spade closed more than 8 percent higher Monday following this announcement, while Coach's stock ended the day up almost 5 percent. 
 
 " ... this is a sensible deal both in terms of the brand fit and the premium that Coach is paying," GlobalData Retail analyst Neil Saunders said in a statement about the transaction. "Ultimately the aim for Coach is to become a business with a portfolio of distinct and compelling luxury brands. Today's announcement is the solid step on that journey." 
 
 Coach has made no secret of its desire to create a global, multi-brand luxury company. 
 
 M&A rumors were already stirring last week, when Coach reported better-than-expected earnings. There were reports surfacing that in addition to Kate Spade, Coach was considering an acquisition of luxury shoe manufacturer Jimmy Choo. 
 
 Earlier in the year, Kate Spade said it was actively considering strategic alternatives, and JAB Holding, the owner of Jimmy Choo, made a similar announcement about that brand recently. 
 
 "Now that Coach is on a clear path to recovery, we believe it is right for the company to explore options for future growth," Saunders had said last week. 
 
 "Some of this will come from the core brand which has the potential to become more of a lifestyle destination," Saunders wrote. "However, Coach needs to be conservative in this push, if only to avoid the previous pitfalls of ubiquity. ... This is one of the reasons why the company is exploring options to buy other brands." 
 
 Saunders predicted an acquisition of the Kate Spade brand could have a lot of potential for Coach as Kate is "in the early stages of developing its own lifestyle brand and would benefit from Coach's sourcing and distribution expertise, as well as some fresh thinking on the design front." 
 
 Coach's latest strategy to cut back on discounting products in the U.S. is finally paying off, as evidenced by the retailer's financials and a stronger bottom line. Making the shift from turnaround mode to growth mode, Coach hopes to boost sales in the coming quarters and better-position its brand in the mind's of shoppers. 
 
 As of Monday's close, shares of Coach have risen 12 percent over the past 12 months and are up 27 percent for the year-to-date period. Kate Spade shares are down more than 22 percent over the past year, and down more than 1 percent for the year-to-date period. 
 
 —Reuters contributed to this report. ||||| Coach has just bagged itself a deal. 
 
 The luxury handbag maker has announced plans to buy competitor Kate Spade in a deal worth $2.4 billion. 
 
 Coach (COH) will pay $18.50 in cash for each Kate Spade share -- an increase of nearly 30% from where the stock was trading prior to rumors of a sale. 
 
 Coach said it expects the transaction to close by the end of the third quarter. It plans to preserve Kate Spade's (KATE) "brand independence" and retain key staff. 
 
 Mickey Chadha, an analyst at Moody's, said the purchase is the latest effort by Coach to "broaden its customer base to a younger, trendier millennial shopper." 
 
 Coach said it expects to eventually generate $50 million in annual savings by combining the firms' inventory management and supply chains. 
 
 That should help boost profitability, but it's bad news for purse-loving bargain hunters. 
 
 Coach chief financial officer Kevin Wills said the cost savings will allow Kate Spade to have fewer "online flash sales," a change that would help bolster the brand's image as maker of true luxury products. 
 
 Coach and Kate Spade make most of their money in the U.S., but both have been working to expand their international presence. 
 
 Coach sales hit a peak during its heyday in 2013, but the brand lost some of its luster and revenue slumped in 2014 and 2015. 
 
 The company is now working to turn things around. In May of last year, Coach splashed out on popular shoe maker Stuart Weitzman. 
 
 Kate Spade has also seen better days. Its shares hit a three-year low in December before takeover rumors began to swirl.
– Coach will spend $2.4 billion for Kate Spade, tying together two premier brands in the luxury goods sector in a bid to snare younger shoppers. Noting that crucial demographic, Coach CEO Victor Luis says in a company release Monday that Kate Spade has a "strong awareness among consumers, especially millennials." Coach will pay $18.50 per share of Kate Spade, a 9% premium to its Friday closing price of $16.97. It follows another recent millennial-minded deal on Coach's part: engaging Selena Gomez (and, it likely hopes, her 120 million Instagram fans) in a deal that will put her in Coach ads and across its social media, reports CNBC. But the brand isn't just going younger, it's going luxe-er, reports the AP: Coach has made an aggressive push to polish its image as a purveyor of opulence, ending many of the promotions it had used to ramp up sales. To power future growth, it's begun to build an empire of luxury brands. In 2015, Coach acquired the high-end footwear company Stuart Weitzman. Last month the company hired Joshua Schulman, the president of Neiman Marcus's Bergdorf Goodman division, and put him in the newly created position as president and CEO of the Coach brand. In CNN Money's view, the acquisition is "bad news for purse-loving bargain hunters." It cites Coach's CFO as saying that Kate Spade will likely reel in the number of "online flash sales" it has.