Fragrance-maker Liz Claiborne Inc. announced that it has agreed to purchase all of the equity interest in Kate Spade LLC for a purchase price of approximately $124 million, including the retirement of debt at closing. Based in New York City, Kate Spade is a designer, marketer, wholesaler and retailer of fashion accessories for women and men through its kate spade and JACK SPADE brands. Kate Spade generated net sales of approximately $84 million for the fiscal year ended July 30, 2006. Consummation of the transaction is subject to review under the provisions of the Hart-Scott-Rodino Act and other customary closing conditions. The transaction is expected to close in the fourth quarter of 2006 and be slightly dilutive to fiscal 2007 earnings per share. Kate Spade’s products are positioned as accessible luxury, targeting women of all ages who appreciate the combination of fashion and practicality. Kate Spade sells its products through a multi-channel, multi-geography distribution strategy, including company-owned retail and outlet stores, domestic and international wholesale accounts and e-commerce. Domestic department store distribution includes high-end purveyors such as Neiman Marcus, Saks Fifth Avenue, Nordstrom, and Bloomingdale’s. Currently, the company operates nineteen Kate Spade specialty retail stores, four Kate Spade outlets and one Jack Spade specialty retail store. Kate Spade’s product line includes handbags, small leather goods, fashion accessories, luggage and baby products. In addition, Kate Spade has existing licensing agreements for shoes, eyewear, tabletop and paper products as well as arrangements with international distributors in Asia. Commenting on the announcement, Trudy Sullivan, President of Liz Claiborne Inc., said: “We are thrilled to welcome this iconic American brand into our Company. With its accessible luxury positioning, Kate Spade further diversifies our portfolio and provides considerable opportunity for organic growth. Our core competencies in both non-apparel and retail will enable us to uniquely capitalize on this compelling brand. We believe the potential for Kate Spade in the direct-to-consumer channel, both domestically and internationally, is sizeable. We also feel there are substantial growth prospects in both domestic and international wholesale accounts, as we optimize the penetration in upscale department and specialty stores. Brand extensions into apparel categories, fragrance and licensing offer additional avenues for expansion.” Ms. Sullivan concluded: “Kate and Andy Spade, along with Elyce Arons and Pamela Bell, have created a terrific brand with a strong aesthetic and widespread consumer recognition. Our job now is to maintain the essence of Kate Spade while driving it to the next level — something we have done quite successfully with other acquired brands in our portfolio. We look forward to collaborating with Kate and the team.”