With key department stores such as Macy's (M)  struggling and closing stores, the world's biggest handbag makers have decided to bulk up in a bid to jolt their sales and profits. 

The latest splashy deal arrived Tuesday, with Michael Kors Ltd. (KORS)  agreeing to buy luxury footwear brand Jimmy Choo plc (JYMHF) .

Michael Kors Monday said it had agreed to pay 230 pence per share in cash, valuing Jimmy Choo's existing issued and to be issued ordinary share capital at approximately £896 million ($1.2 billion).

The 230 pence represents a 36.5% premium to the close price of 168.5 pence on April 21, the day before JAB Luxury started a formal sale process for Jimmy Choo. The deal has been approved by the boards of both companies.

Michael Kors said its offer was "final and will not be increased", unless there is another offer from a third party.

Jimmy Choo shares were up 16.79% in the first hour of trading at 227.75 pence in London.

Following completion of the acquisition, it is expected that Jimmy Choo will operate as it does today with the same management.

"Pierre Denis will continue in his role as Chief Executive Officer of Jimmy Choo. He has led the company since 2012, during which time Jimmy Choo experienced compounded sales growth of 11% annually," Michael Kors CEO John Idol said in a statement. "Additionally, Creative Director Sandra Choi will continue to lead the creative and design teams at the company."

Jimmy Choo has approximately 150 company operated retail stores, 560 multi-brand doors and more than 60 franchise stores worldwide. Like- for-like sales growth at Jimmy Choo fell 0.8% in 2016, due to a slowdown in the luxury goods market. Profit for the year fell to £15.4 million from £19.4 million.

The deal comes just weeks after Coach's (COH) bid to scoop up the whimiscal Kate Spade brand. Wall Street sees the transaction providing a big profit lift for Coach, which will move to cut costs and expand distribution. Those moves are likely to happen over at Michael Kors as Jimmy Choo is integrated.

Kate Spade.
Kate Spade.

Credit Suisse estimates that Coach could see a 40 cents a share lift to profits "over time" from its splashy acquisition of rival Kate Spade. Analyst Christian Buss sees Coach's efforts to clean up Kate Spade's distribution and cut costs as the major profit tailwinds.

"Coach's acquisition of Kate Spade delivers on what we view as one of its biggest opportunities: the potential to take its efficient distribution model and recent return to sales discipline and apply it to acquired brands," Buss writes.

The handbag and accessories maker will acquire Kate Spade for $2.4 billion. The deal represents a 27.5 percent premium to Kate Spade's closing price as December 27, 2016, which is when speculation of Coach's interest surfaced.

Coach sees about $50 million in cost savings within three years of the deal closing, most of which will come from closing unproductive locations at department stores and consolidating operations. 

"Kate Spade has created a very unique positioning in the marketplace -- they own the emotional attributes around fashion that are connected with fun, fashionable and femininity that resonates both in the U.S. but globally with consumers," Coach CEO Victor Luis told TheStreet in an interview. "We were especially excited in our due diligence to find the strength which the Kate Spade brand has with millennial consumers."

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