Capri Holdings, the owner of fashion labels like Michael Kors, Versace, and Jimmy Choo, is being purchased by Tapestry, the parent company of Coach, a retailer of high-end handbags and accessories.
In an effort to increase their influence in Europe, American players have made a number of acquisitions, making fashion even bigger.
In order to compete with rivals like LVMH and Kering, Tapestry will be in a better position thanks to the approximately $8.5 billion (7.7 billion euro) purchase.
According to Tapestry Inc., which also owns the labels Kate Spade and Stuart Weitzman, the group’s combined yearly sales were more than $12 billion (10.9 billion euros), and it has operations in more than 75 nations. Compared to Capri’s, Tapestry’s market capitalization is a little under $10 billion (9.1 billion euros).
In a prepared statement, Tapestry CEO Joanne Crevoiserat said that the merger of Versace, Jimmy Choo, and Michael Kors with Coach, Kate Spade, and Stuart Weitzman “creates a new powerful global luxury house.” Shareholders of Capri Holdings Ltd. will get $57.00 (51.9 euros) in cash per share.
According to Capri Chairman and CEO John Idol, “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.”
In July, Qatari investment firm Mayhoola and French luxury behemoth Kering agreed to a transaction in which Kering would pay 1.7 billion euros for a 30% share in Italian fashion house Valentino. According to the agreement, Gucci’s owner, Kering, has the option to purchase 100% of Valentino by 2028.
Kering had also attempted to acquire Tom Ford, but in the end, Estee Lauder and the manufacturer of luxury products came to an agreement. While this was going on, LVMH acquired Tiffany in 2021 following a dispute between the two businesses over the contract.
In many ways, Tapestry’s acquisition of Capri is a sound business decision. The acquisition, according to GlobalData’s managing director Neil Saunders, will “create an American fashion giant that, while not quite as prestigious or large as its European counterparts, would wield a significant influence in the luxury market.”
Luxury is experiencing a slowdown, particularly in the North American market, where customers, even those at the top end of the income spectrum, are starting to reduce spending, according to Saunders.
Tapestry and Capri are now both moving to international markets to support growth as a result of this pressure.
The transaction, which is anticipated to be finalized next year, has been approved by the boards of Tapestry and Capri. Shareholders of Capri must still approve it. Prior to the start of trading on Thursday, Capri’s stock increased by 58%, while Tapestry’s shares decreased by 3.7%.