Liz Buying Kate

NEW YORK – Kate Spade LLC’s year-long search for a new owner ended Wednesday with word that Liz Claiborne Inc. has agreed to acquire the prestige handbag concern for $124 million, including debt.

Word that an acquisition of Kate Spade by Liz Claiborne was imminent came in Wednesday’s edition of The Wall Street Journal.

Spade, based here, manufactures and markets a range of accessories for women and men and had revenues of about $84 million in the fiscal year ended last July. The acquisition lifts Claiborne into the luxury market and broadens its distribution to include the upper tier of retailers, including Neiman Marcus, which acquired a majority stake in Spade seven years ago. Neiman Marcus itself was acquired for $5.1 billion last year.

Claiborne is expected to accelerate Spade’s activities in both retailing and licensing. The company currently operates 19 Kate Spade specialty stores, one specialty unit under the Jack Spade name, four Kate Spade outlets and an e-commerce site. Its licenses include shoes, eyewear, tabletop and paper products as well as a distribution agreement for Asia.

Trudy Sullivan, president of Claiborne, commented, “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.”

She continued, “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.”

The deal is expected to be consummated by year’s end and will add to Claiborne’s large portfolio of acquired brands, which include Lucky Brand Jeans, Juicy Couture, Enyce and Laundry by Shelli Segal.