Tapestry—the parent firm of luxury brands Coach, Kate Spade, and Stuart Weitzman—has announced its acquisition of Capri Holdings, the owner of many fashion labels, including Michael Kors, Versace, and Jimmy Choo.
Tapestry will be able to fight toe-to-toe with competitors like LVMH and Kering thanks to this roughly $8.5 billion deal.
High-End Fashion Deal
On Thursday, August 10, Tapestry said that the merged firm has worldwide annual sales of more than $12 billion and a presence in more than 75 countries. When comparing Tapestry and Capri, the former has a market valuation of about $10 billion, while the latter is closer to $4 billion.
Tapestry CEO Joanne Crevoiserat stated in an earlier press release, "The combination of Coach, Kate Spade, and Stuart Weitzman together with Versace, Jimmy Choo, and Michael Kors creates a new powerful global luxury house."
For each share of Capri stock they own, stockholders will reportedly get $57.00.
Capri Chairman and CEO John Idol has said that the company's merger with Tapestry would offer it more resources and skills to accelerate the growth of its worldwide reach without compromising the distinctive character of the brands.
The acquisition of Capri is crucial for Tapestry on several fronts.
According to AP News, managing director of GlobalData Neil Saunders predicted that the merger would produce an American fashion behemoth that, although not as prestigious or massive as its European equivalents, would nonetheless exert enormous influence in the luxury industry.
"Luxury is facing something of a slowdown, especially in the North American market where consumers, even at the higher income end of the market, are starting to curtail spending ... This has put pressure on Tapestry and Capri, both of which are now looking to international markets to bolster growth."
Both Tapestry and Capri's boards have authorized the merger, and it is scheduled to finalize next year. Shareholders of Capri are still needed to approve the deal.
Capri's stock opened the Thursday trading day up 58%, while Tapestry's stock dropped 3.7%.
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Acquisitions in Luxury Market
A number of large fashion companies have recently merged or been acquired prior to this Tapestry-Capri merger.
In July, French luxury behemoth Kering announced an agreement to purchase a 30% share in Valentino from Qatari investment company Mayhoola for about $1.7 billion. As part of the terms of the deal, Gucci's parent company Kering may make a full cash offer to acquire Valentino at any time before 2028.
Even though luxury goods manufacturer Kering had attempted to acquire Tom Ford, the purchase ultimately went to cosmetics giant Estee Lauder.
And despite several disagreements regarding the terms of the arrangement, LVMH finally bought Tiffany in 2021.
