Here's Why The Coach-LVMH Deal Could Be A Hoax

After being on a continuous slump the whole year, shares of luxury retailer Coach Inc (NYSE: COH) have seen an upsurge since the last two days on rumors that the French luxury goods conglomerate, LVMH, might be interested in buying the company. However, CNBC's Courtney Reagan explained why those rumors could be very baseless.

“We don’t really know anything about if there is or isn’t a deal. However, I have talked to a number of people and we all know that names like LVMH, Kering, Richemont, they are all acquirers right, that’s what they do, they sort of scoop up these different companies and they make their luxury portfolios,” Reagan said.

“Is Coach going to be possibly in play? Maybe. LVMH hasn’t really gone to that level yet, but if they want to capture some of that aspirational middle to upper income consumer, particularly in Asia, perhaps this is something they should be considering. Paul Swinand at Morningstar cover these guys and he says ‘Look, I will find it really hard to believe that Coach hasn’t showed up in a pitch book given to LVMH by the bankers. Richemont probably not going to go there, they are sort of more of this holding company. They are not really into turnarounds. Kering, probably not, just too much of debt there."

Is The Deal Likely To Happen?

“It’s possible, but as of right now nothing really on the table and Coach has to want to sell too by the way, unless of course it goes hostile. They have this new CEO, new creative director, they have got a game plan. They might want to give it some time to go and they probably think they are worth a lot more than what would be willing to be offered because of what has happened with the stock price.”