American fashion giant is formed after Tapestry buys Capri Holdings for $8.5bn

Tapestry, owner of Coach and Kate Spade, has made fashion headlines after purchasing rival conglomerate Capri Holdings, owner of Michael Kors and Versace, in a deal valued at £6.6 billion ($8.5 billion).

This move elevates Tapestry to a top U.S. fashion house that can better compete with larger European rivals such as LVMH. The deal, which will be financed by Bank of America and Morgan Stanley, is not subject to any financing conditions.

The Wall Street Journal first reported about a potential deal between Capri and Tapestry on Wednesday.

Tapestry, whose shares were down by 2%, will pay Capri shareholders £44.6 ($57) per share in cash, or £5.25 billion (($6.69 billion), representing a premium of nearly 65%. Capri's shares were trading at £42.99 ($54.90) before the bell on Thursday.

Joanne Crevoiserat, CEO of Tapestry, said in a statement: "We’ve created a dynamic, data-driven consumer engagement platform that has fueled our success, fostering innovation, agility, and strong financial results. From this position of strength, we are ready to leverage our competitive advantages across a broader portfolio of brands."

The deal sees Tapestry acquire world-renowned fashion houses including Jimmy Choo, Versace, Michael Kors and more.

Versace

Capri's CEO, John Idol, said on Thursday the deal would provide greater resources and capabilities "to accelerate the expansion of our global reach."

Idol continued: "We are confident this combination will deliver immediate value to our shareholders. It will also provide new opportunities for our dedicated employees around the world as Capri becomes part of a larger and more diversified company."

In June, it was revealed that Capri Holdings’ Jimmy Choo and Versace hit “record revenues”. Luxury fashion group, Capri Holdings Limited, saw revenues total £1.07 billion ($1.35 billion) in Q4 of fiscal 2023, thanks to record-breaking Versace and Jimmy Choo sales.

Main image: Michael Kors