Wall Street loves them. Producing ancillary finances, they are like a stimulus to trade revenues. They are the sole tool behind every successful conglomerate. With the then strike rate of 30%, if it works in your favor, there is no looking back, but if you fall in that 70%, then you should have listened to the wise words of the conventional truth. Yes, we are indeed talking about mergers and acquisitions.
What you’ve just read may be a very dramatic introduction to a merger and acquisition, but analyzing what we are actually witnessing today in the market may put things into perspective. We are at the cusp of a merger wave. And may we add a suave one, as we have the fashion industry taking the lead this time.
To address the luxury party, jumping quickly on the wagon, we had the New York’s own Coach Inc. (COH) grabbing market attention with its early 2015 acquisition of the upscale shoe company, Stuart Weitzman. Credited with making the ‘most expensive’ as well as exclusive sartorial foot-wears, Stuart Weitzman’s buyout by Coach signified the latter’s expanse in the shoe industry. And this year in May, Coach signed a deal for a $2.4 USD billion acquisition of Kate Spade, the handbag and accessories company. With these notable acquisitions, Coach has effectively given reasons to make its competitors get their nails biting.
Retaliating to the pressures of sales and industry grasp of its rival, Michael Kors (NYSE: KORS) turned tables in its favor by acquiring Jimmy Choo, a cult favorite English shoemaker known for its cutting-edge styles. This deal cost about $1.2 billion dollars, but what looks good is that KORS may finally get back on the saddle to defend its position overall. Jimmy Choo’s history of phenomenal clientele (from late Lady Diana to crème Hollywood personnel) and presence along with its new line of shoes reviving the fictional character feel of Carrie Bradshaw, from the series Sex and the City, may give MK the opportunity to amplify its shoe segment.
However, the MK household seems to have just started its shopping spree. Claims from CEO John Idol, hint towards more such ventures and expansions coming their way. However dismissing comments about replicating consolidations like LVMH, which has some 50 odd portfolios under their belt, MK is concentrating on acquiring trend-setting luxury buys.
Could this be the Americans knocking the doors of the global luxury fashion club, which is currently occupied by three, all European, giants (– LVMH, Kering and Richemont)? Well, it’s a game of wait and watch as these acquisitions take form and hopefully much more unfold.