In the latest fashion merger, Coach is set to acquire Kate Spade in a $2.4 billion deal.

The purchase of its smaller handbag rival comes as Coach looks to tap further into the millennial market—a market in which Kate Spade has found major success, thanks to its quirky handbags and ready-to-wear collection.

Image by Getty.

From tapping Selena Gomez as its brand ambassador to introducing unofficial mascot “Rexy the dinosaur,” Coach has long been eyeing a younger demographic. The addition of Kate Spade to its brand portfolio makes for the American fashion house’s most strategic move into millennials yet.

Being able to create is my favorite thing in the whole world. I’m so excited to be a part of the vision and family @coach AND I get the honor to design with @stuartvevers -ahhhhhh

A post shared by Selena Gomez (@selenagomez) on Dec 16, 2016 at 10:57pm PST

According to WWD, Coach made an offer of $18.50 per share, amounting to a total of $2.4 billion. Both brands have already approved the transaction and will maintain independence in the move with Coach saying it “is focused on preserving Kate Spade’s brand independence, as well as retaining key talent, ensuring a smooth transition to Coach Inc.’s ownership.”

In a statement, Victor Luis, CEO of Coach, said: “Kate Spade has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers, especially millennials. 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.”

this season we’re celebrating celebrations, from big to small, and all the joy that they bring. in our our summer campaign ??an ordinary new york city subway ride turns extraordinary with the sounds of flor de toloache (@mariachinyc), the city’s only all-female mariachi band. (volume up!)

A post shared by kate spade new york (@katespadeny) on May 3, 2017 at 8:10am PDT

This article originally appeared on Harper’s BAZAAR US.