Tapestry, the parent company of Coach, to Acquire Owner of Versace and Jimmy Choo in $8.5 Billion Deal

Tapestry, the parent entity of Coach, has revealed its intent to acquire Capri Holdings, the holding company for Michael Kors and various other prestigious fashion labels, for a substantial sum of $8.5 billion. This strategic deal is poised to establish an expansive American luxury fashion conglomerate that will stand as a formidable competitor to prominent European counterparts, including industry giants like LVMH and Kering, which owns Gucci.

Once the acquisition of Capri is finalized, the Tapestry portfolio will encompass six prominent luxury brands. Tapestry, previously recognized as Coach, possesses ownership of its eponymous former brand, along with Kate Spade and Stuart Weitzman. On the other hand, Capri serves as the parent organization for Michael Kors, Versace, and Jimmy Choo.

The financial arrangement entails Tapestry paying Capri’s stakeholders $57 per share in cash, representing a notable premium of almost 65% above the market value. Following the announcement of the transaction, Tapestry’s shares experienced an 8% decline, while Capri’s shares were actively trading at a price of $54.90.

In a formal statement, Joanne Crevoiserat, the CEO of Tapestry, conveyed that this acquisition endeavor “ushers in the creation of a potent global luxury conglomerate, unlocking an exclusive opportunity to enhance value for our worldwide consumers, employees, communities, and shareholders.”

Echoing this sentiment, Capri’s CEO John Idol commented, “Through our alignment with Tapestry, we gain increased resources and capabilities to expedite the expansion of our global footprint, all the while preserving the distinctive essence of our brands.”

Executives from both entities have asserted that this union will be instrumental in broadening the global presence of these esteemed brands across a staggering 75 nations. Moreover, the collaboration is anticipated to lead to efficiencies in the utilization of supply-chain resources.

Comparatively, the amalgamated luxury fashion house will be smaller in scale than its European counterparts. In the preceding year, the combined revenue of these two companies amounted to $12 billion. In stark contrast, LVMH, the conglomerate responsible for 75 brands including Louis Vuitton and Dior, reported an impressive revenue of $87 billion. Meanwhile, Kering, the parent entity of Gucci and Balenciaga, achieved $23 billion in revenue.

Providing insight into the transaction, Neil Saunders from GlobalData remarked, “This agreement arrives at a juncture when the luxury sector is encountering a degree of deceleration, particularly in the North American market.” He further noted, “Consumers, even within the higher income bracket, are exhibiting more restraint in their spending.” As a result, both Tapestry and Capri are actively exploring international markets to fortify their growth strategies.