US fashion brand Michael Kors is to buy British shoe and bag company Jimmy Choo for Â£896m after an auction that attracted a host of international bidders.
Michael Kors said it had agreed to pay 230p per Jimmy Choo share and that the Jimmy Choo directors, who own 1.3% of the firm, âconsider the terms of the acquisition to be fair and reasonableâ. The US firm added its offer was âfinal and will not be increasedâ, unless there was another offer from a third party.
Its strappy stilettoes are worn by celebrity fans including BeyoncÃ© and the Duchess of Cambridge, and were made famous by thefictional Carrie Bradshaw character in the television series Sex and the City. The firm runs 150 stores around the world where it sells its handmade shoes and bags, as well as accessories.
Jimmy Chooâs majority shareholder JAB Luxury put the firm up for sale in April. JAB, the investment arm of Germanyâs billionaire Reimann family, one of Europeâs wealthiest business dynasties, is selling its 67.6% stake to focus on food and other consumer goods.
Jimmy Chooâs chief executive, Pierre Denis, a former LVMH executive who has run the company since 2012, will stay on, alongside creative director Sandra Choi, who has been with the firm since the beginning, and the finance director, Jonathan Sinclair. Denis will make Â£6.2m from his shareholding, while Choi gets Â£2.2m for her stake in the firm. Peter Harf, the chairman, will receive Â£2.1m for his stake.
Jimmy Choo was founded in a Hackney workshop in east London in 1996 by the Malaysian bespoke shoemaker Jimmy Choo, after his designs caught the eye of then Vogue accessories editor Tamara Mellon. Both left after a string of private equity firms took control of the business, with Choo selling his 50% stake in 2001 and Mellon departing in 2011 when JAB bought the firm for more than Â£500m.
Jimmy Choo shares jumped 17% to 228.33p on news of the deal on Tuesday afternoon. The business floated on the London stock market at 140p a share in 2014, valuing it at Â£550m.
Analysts said the deal would add prestige to Michael Kors, a more affordable luxury brand, helping it move into the higher echelons of the global market. For years the American brand, which sells shoes, eyewear, watches, jewellery and perfume, was one of the worldâs fastest-growing fashion brands but sales have slipped recently.
Its chief executive, John Idol, said: âJimmy Choo is known worldwide for its glamorous and fashion-forward footwear. The company is a leader in setting fashion trends. Its innovative designs and exceptional craftsmanship resonate with trendsetters globally. 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.â
Jonathan Buxton, head of consumer and retail at Cavendish Corporate Finance, said: âJimmy Choo is a widely popular footwear brand but like so many upmarket brands, it has been facing declining sales due to discounting in department stores and customer preferences moving away from conspicuous labels.
âFor Michael Kors, this deal presents an opportunity to enter the high-end of the luxury market, to increase sales and to diversify away from its own brand. The acquisition also signals Michael Korsâ pushback against competitor Coach, which earlier this year purchased Kate Spade for $2.4bn, and we expect more consolidation in this market, with more âaffordableâ luxury houses looking to upscale.â
Jon Copestake, analyst at the Economist Intelligence Unit, echoed the sentiment but noted: âThe price seems high given the prevailing market conditions, especially in markets like China where luxury has been losing ground. It is barely three years since Jimmy Chooâs IPO valued the firm at about Â£550m, this announcement implies a 40% gain in valuation during a fairly volatile period within the luxury sector.â