LONDON — Michael Kors has picked out some new shoes to go with its handbags.

On Tuesday, Michael Kors Holdings said it had agreed to buy the shoe company Jimmy Choo for 896 million pounds, or about $1.2 billion, the latest push by an American high-end fashion house to find new sources of growth and what its chief executive characterized as the first step in building a bigger international luxury group.

Many upscale brands like Michael Kors have faced plummeting sales and tepid profits. Mall traffic in North America has declined sharply, while shoppers who have traditionally been loyal to the so-called middle market have gravitated toward brands at extremes of the style and price spectrum.

The trends have played well for e-commerce giants like Amazon, fast-fashion brands like H&M and Zara, and luxury houses like Gucci. But it has left companies like Michael Kors — once the runaway leader of the “accessible luxury market” — exposed.



Jimmy Choo, which shot to prominence thanks to celebrity patrons like Princess Diana and the “Sex and the City” star Sarah Jessica Parker, could give Michael Kors a new avenue for growth.</s>LONDON: US fashion brand Michael Kors yesterday agreed to buy British shoemaker to the stars Jimmy Choo for almost £900 million (S$1.6 billion).

Jimmy Choo - whose celebrity fans include Beyonce, Lady Gaga, Nicole Kidman and Kate Middleton - is the "ideal partner" for the US handbag and clothing maker, it said in a statement.

"The boards of directors of Michael Kors Holdings Limited and Jimmy Choo plc are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition," it added.

The cash deal was pitched at 230 pence per share and values Jimmy Choo - which floated on the London Stock Exchange in 2014 - at about £896m.

"Michael Kors believes it is the ideal partner for Jimmy Choo and is well positioned to support Jimmy Choo's continued growth," it noted.

"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."

The London-listed group, founded 20 years ago by Malaysia-born Jimmy Choo and British socialite Tamara Mellon, will retain its current management team, including chief executive Pierre Denis.</s>Michael Kors said Tuesday that it will pay £896 million ($1.2 billion) in cash for Jimmy Choo.

“We believe that Jimmy Choo is poised for meaningful growth in the future and our company is committed to supporting the strong brand equity that Jimmy Choo has built over the last 20 years,” John Idol, CEO of Michael Kors, said in a statement.

Jimmy Choo shares surged after the news broke, rising by more than 17% in London.

The deal is the latest example of consolidation in the luxury industry. It should help Michael Kors diversify its product lines, while boosting its sales in Asia.

Euromonitor International analyst Pedro Aguilar said that Jimmy Choo had especially benefited from an expansion into designer men’s footwear. He said that retail sales of high-end men’s shoes have outpaced comparable products for women in recent years.

Jimmy Choo’s largest shareholder, JAB Holding, said that it supports the deal. JAB also has large investments in other luxury and fashion brands, including the French perfume maker Coty.

Jimmy Choo, which was founded in 1996 by former Vogue accessories editor Tamara Mellon and designer Jimmy Choo, put itself up for sale in April.

The brand is hugely popular among female fashionistas, and a pair of its stilettos can easily sell for over $1,000.

It has also branched out into menswear and other accessories.

Jimmy Choo first gained international fame after appearing in films and TV shows including “Sex and the City” and “The Devil Wears Prada.”

Its share have increased by over 100% in the past year when Monday’s move is included.</s>Michael Kors Holdings Ltd (NYSE: ) has announced that it is planning to acquire luxury shoe maker Jimmy Choo.

The deal will have Michael Kors paying 230 pence, which is roughly $3.00 in the United States, for Jimmy Choo. This has the total value of the transaction coming to $1.35 billion. KORS has received bridge financing from several lenders to complete the acquisition.

The Board of Directors for Michael Kors and Jimmy Choo have both given their acceptance of the deal. However, the deal will still need approval from regulators, as well as shareholders of Jimmy Choo, before the deal can close.

When it comes to getting approval from Jimmy Choo shareholders, the deal is almost already confirmed. JAB Luxury, Jimmy Choo directors and Sandra Choi hold 69.21% of the company’s shares and will vote in favor of the deal. The vote will need approval from 75% of the company’s shareholders to move forward.

Michael Kors says that it expects the deal for Jimmy Choo will help it in the long run. It is predicting that the acquisition will start being accretive to its GAAP earnings in fiscal 2020.

Michael Kors’ decision to buy Jimmy Choos comes after the company put itself up for sale in April of this year. JAB Luxury, the majority shareholder of the shoe maker, has been moving away from the fashion market. Jimmy Choos has also seen its sales growth slow over the last couple of years.

KORS stock was down slightly as of Tuesday afternoon and is down 18% year-to-date.

As of this writing, William White did not hold a position in any of the aforementioned securities.</s>Luxury brand Jimmy Choo has a new owner!Tuesday fellow designer brand Michael Kors announced it will purchase Jimmy Choo for more than a billion dollars in cash.Jimmy Choo went up for sale in April. It's internationally known for its shoes, while Michael Kors is best known for its handbags.Michael Kors said its new purchase would continue to operate under its existing management.</s>US fashion brand Michael Kors on Tuesday agreed to buy British shoemaker to the stars Jimmy Choo for almost £900 million ($1.2 billion) in a worthy deal.

Jimmy Choo, which holds attraction among the celebrities like Beyonce, Lady Gaga, Nicole Kidman and Kate Middleton, is the “ideal partner” for the US handbag and clothing maker, it said in a statement.

“The boards of directors of Michael Kors Holdings Limited and Jimmy Choo plc are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition,” it added.

The cash deal was pitched at 230 pence per share and values Jimmy Choo — which floated on the London Stock Exchange in 2014 — at about £896m.

“Michael Kors believes it is the ideal partner for Jimmy Choo and is well positioned to support Jimmy Choo's continued growth,” it noted.

“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 per cent 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 36.5pc on the closing share price on April 21.

“A combination with Michael Kors will 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,” added the British firm's chairman Peter Harf.

The group was founded 20 years ago by Malaysia-born Jimmy Choo and British socialite Tamara Mellon. Jimmy Choo became a household name after its shoes repeatedly featured on high profile TV shows, including “Sex and the City”.

It has developed into a luxury fashion brand that also encompasses handbags, leather goods, scarves and fragrances.</s>Luxury brand Jimmy Choo has a new owner!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.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 on Tuesday, while Michael Kors was down 2.5 percent at $34.</s>Michael Kors is buying Jimmy Choo for £896 million ($1.2 billion), both brands announced Tuesday. Under the deal, each shareholder of the high-end footwear label will receive £2.30 ($3) per share in cash, WWD reports.

The acquisition is a response to the decrease in sales for upscale brands, as mall shopping has "declined sharply," reports the New York Times. Though e-commerce sites, fast-fashion brands, and even luxury labels like Gucci continue to thrive, brands in the "accessible luxury market," like Kors, are struggling. The Jimmy Choo deal comes two months after Coach made a similar move by buying Kate Spade for $2.4 billion.

Jimmy Choo makes for an interesting pair with Kors, as the former is known for its sky-high stilettos and glam, crystal-embellished designs, while the latter gravitates towards down-to-earth leather goods and ready-to-wear.

But Kors thinks they make a good match. The company told WWD it plans to incorporate the "experiences, infrastructure, and capabilities that it has developed over the course of its own worldwide growth as a luxury fashion brand to support the growth of Jimmy Choo through retail store openings and further development of its online presence."

Jimmy Choo will continue to function "as it does today" with Pierre Denis as CEO and Sandra Choi as creative director, so don't expect any big changes in the company or its designs. Meanwhile, Kors plans to add an "expanded assortment" of products to its own repertoire.</s>Paris: Michael Kors Holdings Ltd agreed to buy Jimmy Choo Plc for about £896 million ($1.2 billion), clinching the London-based maker of strappy stilettos, handbags and perfume.

The handbag maker will pay 230 pence a share for the luxury shoemaker, a premium of 18% over Monday’s close, the companies said on Tuesday. The price is equal to about 17.5 times Jimmy Choo’s adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) for 2016.

The Jimmy Choo brand rose to prominence in the late 1990s, boosted by high-profile devotees including the late Princess Diana and the fictional Carrie Bradshaw in television series “Sex and the City.”

The deal comes amid consolidation in the luxury industry, with Michael Kors rival Coach Inc agreeing to buy Kate Spade & Co. in early 2017.

Jimmy Choo was acquired by private-equity investors three times before being bought by JAB Holding Co. for more than £500 million in 2011.

JAB, the investment vehicle of the billionaire Reimann family, sold a stake in a 2014 initial public offering, though has remained the company’s majority owner with a 68% stake.

BofA Merrill Lynch and Citigroup advised Jimmy Choo. Goldman Sachs and JPMorgan Chase & Co. advised Michael Kors.

Michael Kors said it would keep Jimmy Choo’s existing management team, led by chief executive officer Pierre Denis. Bloomberg</s>LONDON—Michael Kors is hoping to buy itself some glamour.

The fashion company on Tuesday said it has agreed to acquire upscale shoemaker Jimmy Choo for £896 million ($1.17 billion), as it looks to offset slower growth in its core handbag business.

Michael Kors, like its rivals, has struggled to entice American shoppers to pay full price for its luxury handbags amid fierce price competition and an environment of heavy discounting that has pressured profits. Sales of handbags are lagging as women have traded down to smaller, less-expensive purses.

In May, Michael Kors embarked on a turnaround program saying it would close 100 to 125 of its full-price retail stores and renovate existing stores. The company also reined in the amount of products it sends to department stores, which tend to offer deep discounts, and is trying to get more creative with its designs to get consumers to pay more.

But pressure has mounted on Michael Kors to find new avenues for growth after Coach Inc. COH -0.39% in May agreed to buy Kate Spade & Co. for $2.4 billion, in a bid to tap younger consumers to offset slower growth in the handbag market. That market has slowed to about 2% growth from as much as 15% six years ago, according to Craig Johnson, an analyst at Customer Growth Partners.

Jimmy Choo, whose shares were up 17% Tuesday morning, has been on the block since April, when European investment fund JAB Holding Co. said it was putting the luxury shoemaker up for sale as it looks to focus on its restaurant and coffee holdings.

The British brand, said to have been a favorite of Princess Diana, sells pumps and boots for as much as £2,995.

Jimmy Choo has also struggled with the same discounting problems in U.S. department stores that Michael Kors is facing, although the brand has been helped by a stronger performance in markets like the U.K., China and Japan, where the Jimmy Choo name still carries weight. While upscale women’s shoes remain its core business, Jimmy Choo has been branching out into men’s shoes as it looks for growth. The company has about 150 directly operated stores, leaving what analysts have said is a long runway for bricks and mortar expansion.

Last year, the shoemaker turned £364 million in sales, up almost 15% from a year earlier.

In a statement, Michael Kors described itself as “the ideal partner for Jimmy Choo,” saying it would “support the growth of Jimmy Choo through retail store openings and further development of its online presence as well as through an expanded assortment of additional fashion product offerings.”

Jimmy Choo will continue to be run by Chief Executive Pierre Denis, a former LVMH executive who has led the shoe company since 2012.

Jimmy Choo said it intends to recommend its shareholders vote in favor of the deal. Michael Kors said it has received around 67.7% of Jimmy Choo’s shareholders’ approval willing to vote in favor of the deal.

—Suzanne Kapner and Razak Musah Baba contributed to this article.
Michael Kors buys Jimmy Choo for US$1.2 billion.