Iconic footwear brand Jimmy Choo (CHOO) has agreed an £896m all cash takeover by US luxury retailer Michael Kors. That news sparks a 17.1% share price surge to 228.25p.
The takeover is pitched at 230p per share, a very decent 36.5% premium to the share price before Jimmy Choo put itself up for sale in April.
PRINCELY PREMIUM
The high-end women’s shoes-to-handbags seller put itself under the hammer in April after majority shareholder JAB Luxury, part of the investment arm of the billionaire Reimann family, flagged its intention to focus on consumer goods.
The 230p takeout price represents a 64.3% premium to Jimmy Choo’s 2014 IPO issue price of 140p and values the high-end shoe retailer at a significant 17.5 times the adjusted EBITDA generated in calendar 2016.
Shares prudently took profits on Jimmy Choo, a Great Ideas selection highlighted at 133p in April, the British luxury shoemaker having rewarded us with a handsome 39.7% gain. We prudently urged readers to sell in the open market, erring on the side of caution, just in case a sale failed to come to fruition.
BRAND CHAMPION
After initially struggling, falling to a 95.95p low before the Brexit vote, Jimmy Choo’s shares subsequently rallied and then some.
Despite difficult luxury industry conditions, investors warmed to the brand strength, pricing power and global growth potential of Jimmy Choo, co-founded in 1996 by one-time Vogue accessories editor Tamara Mellon and its eponymous couture shoemaker.
Michael Kors, famed for its hugely popular handbags, has been struggling in recent quarters with declining like-for-like sales as fewer consumers visit its shops. In response, it has invested in its online business, expanded into dresses and menswear and now pounced on shoes specialist Jimmy Choo.
John D. Idol, Michael Kors’ chairman and CEO, comments: ‘We are pleased to announce the acquisition of Jimmy Choo, an iconic brand with a rich history as a leading global luxury brand. Jimmy 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.'
