On Tuesday, Michael Kors Holdings said it had agreed to buy the shoe company Jimmy Choo for 896 million pounds ($1.2 billion, 1.0 billion euros).
A s part of a strategic review, Jimmy Choo was put up for sale in April and had attracted attention from a number of suitors.
In May, it downgraded its sales forecasts for the rest of the year, and said it would close as many as 125 of its full-price retail stores. Its share price has lost a fifth of its value in 2017.
The deal for Jimmy Choo could give it a new avenue for growth.
“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.
Under the terms of the agreement, Jimmy Choo will become a wholly-owned subsidiary of Michael Kors.
Mr Kors himself, the honorary chairman and chief creative officer of the firm that bears his name, described the purchase as “a premier fashion luxury house that offers distinctive footwear, handbags and other accessories”.
“We believe that Jimmy Choo is poised for meaningful growth in the future,” John D. Idol, the Michael Kors chairman and chief executive, said in a news release. “We are committed to supporting the strong brand equity that Jimmy Choo has built over the last 20 years.”
“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 sale plan was backed by Jimmy Choo’s main shareholder, JAB Holdings, owned by the German billionaire Reimann family which holds 67.66 percent of Jimmy Choo.
Michael Kors Holdings said the acquisition was expected to deliver a number of benefits, including “the opportunity to grow Jimmy Choo sales to one billion” and “a more balanced portfolio with greater product diversification”.
It said Jimmy Choo would also have the opportunity to grow in the men’s luxury footwear category, as well as greater exposure to global markets, “particularly the fast-growing market in Asia”.
The agreed takeover bid represented a premium of 36.5 percent on the closing share price on April 21.
The British firm was co-founded by Malaysian shoemaker Jimmy Choo, who trained at the renowned Cordwainers Technical College in London, and former Vogue journalist Tamara Mellon in 1996.
“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 deal came just months after Coach agreed to a $2.4 billion deal to buy American handbag brand Kate Spade, apparently hoping that the combination of two affordable luxury brands could help it carve out new territory in a crowded market.
Goldman Sachs and J.P. Morgan advised Michael Kors, while Bank of America Merrill Lynch and Citigroup advised Jimmy Choo.