Tapestry, the parent company of Coach, announced a huge deal in which they’re purchasing Capri Holdings, the owner of luxury brands like Michael Kors, Versace, and more.
The parent company of Coach, Tapestry, recently announced an $8.5 billion deal in which they purchased Capri Holdings, the owner of multiple luxury brands, which will create a US fashion conglomerate that will likely compete with major fashion competitors in Europe.
Tapestry’s recent acquisition of Capri Holdings will likely compete with LVMH and Kering, which owns Gucci.
This deal will also mean that Tapestry will house six major luxury brands under their name. Tapestry was formerly known as just Coach, of which it also owns, and before this deal also owned Kate Spade and Stuart Weitzman. Capri Holdings is the parent company of Michael Kors, Versace, and Jimmy Choo.
According to reports, Tapestry is paying the Capri shareholders $57 per share in cash, which represents a premium of about 65%; after the deal was announced shares of Tapestry decreased by 8% while shares of Capri were trading at $54.90. Tapestry chief executive Joanne Crevoiserat spoke about the acquisition recently.
“[The acquisition] creates a new powerful global luxury house, unlocking a unique opportunity to drive enhanced value for our consumers, employees, communities, and shareholders around the world.”
“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,” said Capri CEO John Idol.
Executives have also stated that the acquisition will aid in expanding the global operations of brands throughout 75 countries which will help companies save on supply-chain resources. This new fashion house will still be much smaller than rivals in Europe. Last year, the two companies involved in the deal made $12 billion in revenue.
LVMH, which owns 75 brands including Louis Vuitton and Dior, earned around $87 billion in revenues. Also for comparison, Kering, the owner of Gucci and Balenciaga, earned $23 billion in revenue.
“The deal comes at a time when luxury is facing something of a slowdown, especially in the North American market,” said Neil Saunders of GlobalData.
“Consumers, even at the higher income end of the market, are starting to curtail spending. This has put pressure on Tapestry and Capri, both of which are now looking to international markets to bolster growth,” he wrote.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at email@example.com.