Women's apparel maker Liz Claiborne Inc. ( LIZ) said Wednesday it is buying handbag maker Kate Spade LLC for about $124 million in cash.

With sales of $84 million in fiscal 2006, Kate Spade designs and markets high end purses and accessories.

In Sept. 2005, Kate Spade began looking for a buyer. Luxury department store chain Neiman Marcus Inc. had purchased a 56 percent stake in the company in 1999.

Liz Claiborne expects the deal to close during the fourth-quarter and slightly cut into fiscal 2007 earnings per share.