Tapestry Acquiring Capri in $8.5 Billion Deal

Tapestry Inc. is buying Capri Holdings in a roughly $8.5 billion deal that alters the fashion landscape and remakes the world of accessible luxury handbags.

The acquisition brings together Tapestry’s Coach, Kate Spade and Stuart Weitzman with Capri’s Michael Kors, Versace and Jimmy Choo to create a $12 billion giant.

It’s a transaction that marks the culmination of years of deal making by both companies and is the closest America has yet come to building a branded portfolio powerhouse in the image of LVMH Moët Hennessy Louis Vuitton or Kering.

The combined company will have a much larger footprint to command attention and can also cut corporate overhead to the tune of $200 million for leaner operations. Having a larger portfolio means more stability, with stronger brands able to provide some cover when any one brand lags. 

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The combined company will operate in 75 countries and last year produced adjusted operating profits of nearly $2 billion. 

Joanne Crevoiserat, chief executive officer of Tapestry, said: “We are ready to leverage our competitive advantages across a broader portfolio of brands. The combination of Coach, Kate Spade, and Stuart Weitzman together with Versace, Jimmy Choo, and Michael Kors 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.”

And John D. Idol, chairman and CEO of Capri, said: “Today’s announcement marks a major milestone for Capri. It is a testament to all that our teams have achieved in building Versace, Jimmy Choo, and Michael Kors into the iconic and powerful luxury fashion houses they are today. 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. 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.”

Under the deal, Tapestry is paying $57 a share, reaching an enterprise value of $8.5 billion. That represents a deal price of 9-times adjusted EBITDA.

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