10 August 2023

Tapestry acquires Capri for $8.5 billion

Tapestry, the parent company of fashion brands Coach, Kate Spade and Stuart Weitzman, has agreed to acquire Capri Holdings, the parent company of luxury brands Versace, Jimmy Choo and Michael Kors, for an estimated price of $8.5 billion. New York-based Tapestry will pay $57 per share, a significant 65% premium to Capri's last closing price.

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Capri's market valuation has seen a significant decline from a peak of US$20 billion in early 2014, primarily due to issues stemming from the market saturation of its Michael Kors brand and a series of acquisitions that have yielded mixed results. In 2017, the company acquired shoe brand Jimmy Choo and the following year added renowned Italian fashion house Versace. Due to declining sales, the company's stock has fallen by approximately 40% over the course of this year.

Tapestry, meanwhile, significantly increased its sales in China in the first quarter, beating expectations, and its stock has risen nearly 20% in the past year, giving it a value of about $9.6 billion. Tapestry forecasts that the merged fashion conglomerate will generate annual sales in excess of US$12 billion, with an estimated US$200 million in cost savings from synergies within three years. The new venture is expected to employ more than 33,000 people globally.

The acquisition of Capri could also mark a resurgence of M&A activity in the luxury goods sector in the US, while Europe has seen several deals recently. France's Kering has acquired a 30% stake in esteemed Italian fashion house Valentino, as well as perfume brand Creed. And in early 2021, LVMH, Europe's largest company by market capitalisation, successfully completed its $15.8 billion acquisition of Tiffany.