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COACH, INC. (NYSE:COH) Files An 8-K Entry into a Material Definitive Agreement

COACH, INC. (NYSE:COH) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement

Agreement and Plan of Merger
On May 7, 2017, Coach, Inc. (Coach) entered into an Agreement and
Plan of Merger (the Merger Agreement) with Kate Spade Company, a
Delaware corporation (Kate Spade), and Chelsea Merger Sub Inc., a
Delaware corporation and direct wholly owned subsidiary of Coach
(Merger Sub).
Transaction Structure
to and subject to the terms and conditions of the Merger
Agreement, Merger Sub will commence an all-cash tender offer (the
Offer) within fifteen (15) business days after the date of the
Merger Agreement to acquire any and all of Kate Spades
outstanding shares of common stock, par value $1.00 per share
(the Shares). The Shares will be acquired at a purchase price of
$18.50 per Share (the Offer Price), net to the seller in cash,
without interest, and subject to any required withholding of
taxes. The Offer will initially expire at 11:59 p.m. (New York
City time) on the date that is twenty (20) business days
following the commencement of the Offer. Under certain
circumstances, Merger Sub may be required to extend the Offer on
one or more occasions in accordance with the terms set forth in
the Merger Agreement and the applicable rules and regulations of
the United States Securities and Exchange Commission (the SEC).
Merger Sub will not be required to extend the Offer beyond
February 7, 2018, and may not extend the Offer beyond such date
without the prior written consent of Kate Spade.
to and subject to the terms and conditions of the Merger
Agreement, as soon as possible following the time at which the
Shares validly tendered and not properly withdrawn to the Offer
are first accepted for payment under the Offer (the Acceptance
Time), Merger Sub will merge with and into Kate Spade, with Kate
Spade surviving the merger as a wholly owned subsidiary of Coach
(the Surviving Corporation), to the procedure provided for under
Section 251(h) of the Delaware General Corporation Law (the
Merger).
At the effective time of the Merger (the Effective Time), each
issued and outstanding Share (other than Shares owned by (i)
Coach, Kate Spade or any of their wholly-owned subsidiaries,
which Shares will be cancelled and will cease to exist or (ii)
any person who is entitled to and properly demands statutory
appraisal of his, her or its Shares under Delaware law) will be
converted into the right to receive an amount in cash equal to
the Offer Price, without interest, subject to any required
withholding taxes.
At the Effective Time, (i) each Kate Spade stock option that is
outstanding as of immediately prior to the Effective Time will be
canceled and converted into the right to receive an amount in
cash equal to (i) the excess, if any, of the Offer Price over the
stock option exercise price applicable thereto, multiplied
by
(ii) the number of Shares that are subject to such Kate
Spade stock option, subject to any required withholding of taxes.
Any Kate Spade stock options with a per share exercise price
equal to or greater than the Offer Price will be canceled for no
consideration. In addition, except as otherwise set forth in
individual agreements, at the Effective Time, (i) each Kate Spade
restricted stock unit award will be assumed by Coach and
converted into a restricted stock unit award that settles in
shares of Coach common stock, (ii) each Kate Spade performance
share unit award will be assumed by Coach and converted into a
restricted stock unit award that settles in shares of Coach
common stock, with the number of shares to be determined assuming
that the Kate Spade performance share unit award has achieved
performance at target level and (iii) each Kate Spade market
share unit award will be assumed by Coach and converted into a
restricted stock unit that settles in shares of Coach common
stock, with the number of shares to be determined assuming that
the Kate Spade market share unit award has achieved performance
at target level, with each of the converted restricted stock unit
awards continuing to vest on the same time-based schedule as the
related Kate Spade restricted stock unit award, Kate Spade
performance share unit award or Kate Spade market share unit
award, as applicable, subject to continued employment.
Conditions
The obligation of Merger Sub to purchase Shares tendered in the
Offer is subject to customary closing conditions, including (i) a
number of Shares must have been validly tendered and received and
not validly withdrawn that, when added to the number of Shares
(if any) then owned by Coach or Merger Sub, equals at least one
Share more than 50% of all Shares then outstanding, (ii) the
expiration or termination of applicable waiting periods under, or
receipt of the applicable consents required under, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
and relevant antitrust and competition laws in Japan, (iii) the
absence of any order, applicable law or other legal restraints of
an applicable governmental authority enjoining or otherwise
prohibiting the consummation of the Offer or the Merger, (iv) the
accuracy of certain representations and warranties of each of the
parties contained in the Merger Agreement, subject to specified
materiality qualifications, (v) compliance, in all material
respects, by each of the parties with their respective covenants
contained in the Merger Agreement, (vi) the absence of a material
adverse effect on Kate Spade since the date of the Merger
Agreement, and (vii) the other conditions set forth in the Merger
Agreement. The consummation of the Offer is not subject to a
financing condition.
Other Terms of the Merger Agreement
The Merger Agreement contains customary representations,
warranties and covenants for a transaction of this nature,
including the obligation of Kate Spade to (i) carry on its
business in the ordinary course during the period between the
execution of the Merger Agreement and the consummation of the
Merger and (ii) comply with certain other negative operating
covenants, as set forth more fully in the Merger Agreement.
The Merger Agreement also contains a customary no solicitation
provision that, subject to certain exceptions, restricts Kate
Spades ability to (i) solicit, initiate or knowingly encourage
any inquiries or submission that could lead to a takeover
proposal or (ii) enter into, engage or participate in discussions
or negotiations with, furnish any nonpublic information relating
to Kate Spade to, or execute any agreement with, third parties in
connection with a takeover proposal. The no solicitation
provision is subject to a fiduciary out that permits Kate Spade,
under certain circumstances and in compliance with certain
obligations, to terminate the Merger Agreement and accept a
superior proposal upon payment to Coach of the termination fee
discussed below.
The Merger Agreement also contains certain customary termination
rights for both Coach and Kate Spade, including, among others,
(i) the ability of either Coach or Kate Spade to terminate the
Merger Agreement if the Offer is not consummated on or before
February 7, 2018, (ii) the ability of Kate Spade to terminate the
Merger Agreement, under certain circumstances and in compliance
with certain obligations, to enter into an agreement for an
alternative transaction that constitutes a superior proposal or
(iii) the ability of Coach to terminate the Merger Agreement due
to a change in the recommendation of the Kate Spade board of
directors with respect to the Offer. Upon termination of the
Merger Agreement in specified circumstances, including clause
(ii) and (iii) above, Kate Spade is required to pay Coach a
termination fee of $83,271,000.
The foregoing description of the Merger Agreement does not
purport to be complete and is qualified in its entirety by
reference to the actual terms of the Merger Agreement, which will
be filed as an exhibit to Coachs quarterly report on Form 10-Q
for the fiscal quarter ending April 1, 2017. The Merger Agreement
will be provided to inform investors of its terms and is not
intended to provide any financial or other factual information
about Kate Spade, Coach or Merger Sub or to modify or supplement
any factual disclosures about the Company in its public reports
filed with the SEC. In particular, the representations,
warranties and covenants contained in the Merger Agreement (i)
were made only for purposes of that agreement and as of specific
dates, (ii) were made solely for the benefit of the parties to
the Merger Agreement, (iii) may be subject to limitations agreed
upon by the parties for the purposes of allocating contractual
risk between the parties to the Merger Agreement rather than
establishing those matters as facts and (iv) may be subject to
standards of materiality applicable to the contracting parties
that differ from those generally applicable to Coachs SEC
filings. Moreover, information concerning the subject matter of
the representations, warranties and covenants may change after
the date of the Merger Agreement, which subsequent information
may or may not be fully reflected in public disclosures by Coach
or Kate Spade. Accordingly, the representations and warranties in
the Merger Agreement should not be relied on as characterizations
of the actual state of facts about Coach or Kate Spade.
Commitment Letters
On May 7, 2017, Coach entered into a bridge facility commitment
letter (the Commitment Letter) to which Merrill Lynch, Pierce,
Fenner Smith Incorporated and Bank of America, N.A. (together,
BofA Merrill Lynch) committed to provide up to $2.1 billion under
a 364-day senior unsecured bridge term loan credit facility to
finance the Merger in the event that Coach has not issued senior
unsecured notes and obtained term loans prior to the consummation
of the Merger. The commitment is subject to customary conditions.
The foregoing description of the Commitment Letter does not
purport to be complete and is qualified in its entirety by
reference to the actual terms of the Commitment Letter, which
will be filed as an exhibit to Coachs quarterly report on Form
10-Q for the fiscal quarter ending April 1, 2017.
Item 8.01 Other Events
On May 8, 2017, Coach and Kate Spade issued a joint press release
announcing, among other things, the entry into the Merger
Agreement. The text of the press release is attached as Exhibit
99.1 and is incorporated herein by reference. In addition, a
conference call and webcast will be held on May 8, 2017 regarding
the proposed transaction during which the speakers will discuss
the presentation that will be filed as an exhibit to Coachs
Schedule TOC on May 8, 2017.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
EXHIBIT NUMBER
EXHIBIT DESCRIPTION
99.1
Joint Press Release, dated May 8, 2017.
Additional Information and Where You Can Find It
The tender offer referred to in this filing has not yet
commenced. This filing is for informational purposes only and is
neither an offer to purchase nor a solicitation of an offer to
sell, securities, nor is it a substitute for the tender offer
materials that will be filed with the U.S. Securities and
Exchange Commission (SEC). The solicitation and offer to buy the
issued and outstanding shares of Kate Spade common stock will
only be made to an offer to purchase and related tender offer
materials described more fully below. At the time the tender
offer is commenced, Merger Sub will file a tender offer statement
with the SEC on Schedule TO containing an offer to purchase, form
of letter of transmittal and related materials, and Kate Spade
will file with the SEC a tender offer solicitation/recommendation
statement on Schedule 14D-9 with respect to the tender offer.
INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE TENDER OFFER
STATEMENT AND RELATED MATERIALS (INCLUDING THE OFFER TO PURCHASE,
RELATED LETTER OF TRANSMITTAL AND OTHER TENDER OFFER DOCUMENTS)
AND THE SOLICITATION/RECOMMENDATION STATEMENT CAREFULLY (WHEN
THEY BECOME AVAILABLE) AND IN THEIR ENTIRETY BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE TENDER OFFER THAT SHOULD
BE READ PRIOR TO MAKING A DECISION TO TENDER SHARES. These
materials will be sent free of charge to all Kate Spade
stockholders. In addition, all of those materials (and all other
tender offer documents filed or furnished by Kate Spade, Coach or
Merger Sub with the SEC) will be available at no charge from the
SEC through its website at www.sec.gov. The Schedule TO
(including the offer to purchase and related materials) and the
Schedule 14D-9 (including the solicitation/recommendation
statement), once filed, may also be obtained for free by
contacting the Information Agent for the tender offer which will
be named in the Schedule TO.
In addition to the offer to purchase, the related letter of
transmittal and certain other tender offer documents, as well as
the Solicitation/Recommendation Statement, Coach and Kate Spade
file annual, quarterly and current reports and other information
with the SEC. You may read and copy any reports or other
information filed by Coach or Kate Spade at the SEC public
reference room at 100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on
the public reference room. Coachs and Kate Spades filings with
the SEC are also available to the public from commercial
document-retrieval services and at the SECs website at
www.sec.gov.
Hong Kong Depository Receipts
Neither the Hong Kong Depositary Receipts nor the Hong Kong
Depositary Shares evidenced thereby have been or will be
registered under the U.S. Securities Act of 1933, as amended (the
“Securities Act”), and may not be offered or sold in the United
States or to, or for the account of, a U.S. Person (within the
meaning of Regulation S under the Securities Act), absent
registration or an applicable exemption from the registration
requirements. Hedging transactions involving these securities may
not be conducted unless in compliance with the Securities Act.
Cautionary Statement Regarding Forward-Looking Statements
This report may contain forward-looking statements within the
meaning of the federal securities laws, including Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In this context,
forward-looking statements often address expected future business
and financial performance and financial condition, and often
contain words such as expect, anticipate, intend, plan, believe,
seek, see, will, would, target, similar expressions, and
variations or negatives of these words. Forward-looking
statements by their nature address matters that are, to different
degrees, uncertain, such as statements about the consummation of
the proposed transaction and the anticipated benefits thereof.
Such statements involve risks, uncertainties and assumptions. If
such risks or uncertainties materialize or such assumptions prove
incorrect, the results of Coach and its consolidated subsidiaries
could differ materially from those expressed or implied by such
forward-looking statements and assumptions. All statements other
than statements of historical fact are statements that could be
deemed forward-looking statements, including any statements
regarding the expected benefits and costs of the Offer, the
Merger and the other transactions contemplated by the Merger
Agreement; the expected timing of the completion of the Offer and
the Merger; the ability of Coach, Merger Sub and Kate Spade to
complete the Offer and the Merger considering the various
conditions to the Offer and the Merger, some of which are outside
the parties control, including those conditions related to
regulatory approvals; any statements of expectation or belief;
and any statements of assumptions underlying any of the
foregoing. Risks, uncertainties and assumptions include the
possibility that expected benefits may not materialize as
expected; that the Offer and the Merger may not be timely
completed, if at all; that, prior to the completion of the
transaction, Kate Spades business may not perform as expected due
to transaction-related uncertainty or other factors; that the
parties are unable to successfully implement integration
strategies; and other risks that are described in Coachs latest
Annual Report on Form 10-K and its other filings with the SEC.
Coach assumes no obligation and does not intend to update these
forward-looking statements.

About COACH, INC. (NYSE:COH)
Coach, Inc. (Coach) is a design house of luxury accessories and lifestyle collections. The Company’s product offering uses a range of leathers, fabrics and materials. Its segments include North America, International and Stuart Weitzman. The North America segment includes sales of Coach brand products to North American customers through Coach-operated stores (including the Internet) and sales to North American wholesale customers. The International segment operates department store concession shop-in-shop locations and retail and outlet stores, as well as e-commerce Websites. The Stuart Weitzman segment includes sales across the world generated by the Stuart Weitzman brand, primarily through department stores in North America and international locations, and within Stuart Weitzman operated stores (including the Internet) in the United States, Canada and Europe. Its product offerings include women’s and men’s bags, ready-to-wear, including outerwear, watches, fragrance and jewelry. COACH, INC. (NYSE:COH) Recent Trading Information
COACH, INC. (NYSE:COH) closed its last trading session up +0.09 at 42.66 with 2,611,084 shares trading hands.

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