Coach parent company in $8.5 billion deal to acquire three luxury brands
Tapestry has entered into a deal that will create a U.S. luxury fashion powerhouse.
The parent company of Coach, Kate Spade and Stuart Weitzman will acquire Capri Holdings Limited, which is made up of Michael Kors, Versace and Jimmy Choo, in a deal with an enterprise value of approximately $8.5 billion.The transaction is not subject to any financial conditions as Tapestry secured $8 billion from the Bank of America and Morgan Stanley.
The combined company generated global annual sales in excess of $12 billion and achieved nearly $2 billion in adjusted operating profit in the prior fiscal year. It will operate in more than 75 countries. The companies project $200 million in savings from synergies within three years of the deal closing.
The deal comes as Tapestry has successfully raised the profile of its biggest brand, Coach, reducing promotional mark-downs and targeting younger consumers. In the company’s most recent quarter, sales at Coach rose 7% to $1.144 billion. Tapestry also raised its full-year outlook.
“We’ve created a dynamic, data-driven consumer engagement platform that has fueled our success, fostering innovation, agility, and strong financial results,” stated Joanne Crevoiserat, CEO of Tapestry. “From this position of strength, we are ready to leverage our competitive advantages across a broader portfolio of brands.”
Industry experts said the deal would help both companies better compete against their European rivals, particularly LVMH, whose 75 brands include Tiffany, Fendi, Louis Vuitton and Dior.
In a statement, John D. Idol, chairman and CEO of Capri Holdings, said that the combination of the two companies “will 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,” he said.
The boards of both companies have unanimously approved the acquisition, which is expected to close in calendar year 2024. Shareholders will receive $57 per share, a 59% premium on the 30-day volume average of Capri’s value.