Tapestry, the parent company of Coach and other brands, is set to acquire Capri Holdings, the owner of Michael Kors, in a significant $8.5 billion deal.
This move aims to create a prominent US fashion conglomerate that can better compete with larger European counterparts in the global luxury market.
According to a Bloomberg report, under the terms of the deal, Tapestry will pay $57 per share in cash to Capri shareholders, totaling around $6.69 billion. This offer represents a premium of nearly 65% over Capri's pre-deal share price of $54.90.
“We are confident this combination will deliver immediate value to our shareholders,” Capri chief executive officer John Idol said in the statement, as stated by the Bloomberg report. “By joining with Tapestry, we will have greater resources and capabilities to accelerate the expansion of our global reach while preserving the unique DNA of our brands.”
The merger combines Tapestry's brands, Kate Spade, Stuart Weitzman, with Capri's portfolio, Jimmy Choo, Versace, to bolster the position of US luxury companies, historically trailing behind European counterparts like LVMH. This acquisition addresses potential post-pandemic declines in U.S. luxury demand due to inflation, prompting a focus on international markets for growth and stability.
Both Tapestry and Capri have expanded through acquisitions in the past. Six years ago, in 2017, Tapestry (then known as Coach Inc) acquired Kate Spade for $2.4 billion. Capri (formerly Michael Kors), on the other hand, purchased Jimmy Choo for $1.2 billion. In the subsequent year, Capri acquired Versace for $2.2 billion.
The Capri-Tapestry deal may mark a revival of deal-making in the US luxury industry, in contrast to European luxury giants that have been making acquisitions. For instance, French luxury group Kering recently acquired a 30% stake in Italian fashion label Valentino. What's more, LVMH successfully concluded its substantial $15.8 billion acquisition of Tiffany in early 2021.