Tapestry, the parent company of Coach, has made a groundbreaking move by acquiring Capri Holdings, which owns luxury fashion brands like Michael Kors. This acquisition, valued at $8.5 billion, will establish an American luxury fashion conglomerate that will directly compete with major players in Europe such as LVMH and Kering.
Once the deal is finalized, Tapestry will oversee a total of six leading luxury brands, including its original namesake Coach, as well as Kate Spade and Stuart Weitzman. Capri, on the other hand, holds the parent company title for Michael Kors, Versace, and Jimmy Choo.
Tapestry has agreed to pay Capri shareholders $57 per share in cash, representing a remarkable premium of almost 65%. Consequently, Tapestry’s shares dropped by 8%, while Capri shares were trading at $54.90. In light of this acquisition, Joanne Crevoiserat, the CEO of Tapestry, expressed excitement, stating that it “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.” John Idol, the CEO of Capri, also shared his enthusiasm for the partnership, emphasizing that the unified entity would benefit from increased resources and capabilities to expand its global reach while preserving each brand’s distinctive identity.
The executives believe that this acquisition will facilitate the brands’ expansion into 75 countries and enable significant savings in supply-chain resources. However, it is noteworthy that the resulting fashion house will be smaller in comparison to its European counterparts. In 2020, Tapestry and Capri collectively generated $12 billion in revenue, while LVMH reported an impressive $87 billion in revenues with ownership of 75 brands, and Kering generated $23 billion in revenue as the owner of Gucci and Balecianga.
Neil Saunders, a commentator from GlobalData, commented on the acquisition in the context of the current luxury market landscape. He noted that the luxury sector is experiencing a slowdown, particularly in the North American market. To combat this challenge, Tapestry and Capri are actively seeking to capitalize on international markets to drive growth.
In summary, the acquisition of Capri Holdings by Tapestry marks a significant milestone in the luxury fashion industry, as it creates a formidable American competitor to European giants. This strategic move not only expands Tapestry’s brand portfolio but also offers opportunities for synergy and growth in a challenging market environment.
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