Accessories seller Coach said Monday that it had reached a deal to acquire upscale retailer Kate Spade in a shakeup for the luxury goods industry as it grapples with sluggish sales.

Coach said it would pay $2.4 billion for Kate Spade, which it plans to maintain as an independent brand.

The company said it expects to save $50 million annually in "synergies" within three years, which often comes from eliminating overlapping costs.

Coach said it had identified global expansion opportunity through opening Kate Spade specialty stores.

"Through this acquisition, we will create the first New York-based house of modern luxury lifestyle brands, defined by authentic, distinctive products and fashion innovation," Coach CEO Victor Luis said in a statement. "We are confident that this combination will strengthen our overall platform and provide an additional vehicle for driving long-term, sustainable growth.”

Kate Spade had confirmed in February that it was considering "strategic alternatives," as the handbag, clothing, shoes and accessories seller faces a strong U.S. dollar that is dampening foreign tourist spending.

The company enjoyed a 39% boost in net income in its fourth quarter and a 9.8% increase in sales. But that was helped by the opening of 52 new stores in 2016.

Sales per square foot at stores open at least a year fell 2.4% in the 12-month period ending Oct. 1, underscoring the retailer's challenges, including a sluggish luxury market, lower growth in China and unfavorable currency rates.

The companies said their boards had unanimously authorized the deal, which they expect to close in the third quarter.

Coach is paying $18.50 per share for Kate Spade. That's 27.5% more than the stock was worth on Dec. 27, before rumors of a possible deal surfaced.

Kate Spade shares rose 8.1% to $18.35 in pre-market trading Monday.