Coach owner Tapestry to acquire Capri Holdings in $8.5 billion deal

Tapestry, the fashion conglomerate behind Coach and Kate Spade, will acquire competitor Capri Holdings in a $8.5 billion deal announced on Thursday. 

Once the deal closes, it will create an American fashion giant that won’t be quite as large as its European competitors but one that will be better positioned to compete in the luxury market. 

It brings together six fashion brands – Tapestry’s Coach, Kate Spade and Stuart Weitzman and Capri’s Versace, Jimmy Choo and Michael Kors. 

Shares of Capri surged 58% in premarket trading off the news while shares of Tapestry fell slightly.

“We’ve created a dynamic, data-driven consumer engagement platform that has fueled our success, fostering innovation, agility, and strong financial results. From this position of strength, we are ready to leverage our competitive advantages across a broader portfolio of brands,” Tapestry CEO Joanne Crevoiserat said in a statement. 

Capri’s CEO John Idol said the deal will give the company “greater resources and capabilities” to expand its global reach. 

“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,” said Idol. 

The boards of both companies have unanimously approved the acquisition and shareholders will receive $57 per share, a 59% premium on the 30-day volume average of Capri’s value. 

The deal is not subject to any financing conditions. It will be funded with bridge financing from Bank of America and Morgan Stanley in a combination of senior notes, term loans and cash, a portion of which will be used to pay some of Capri’s outstanding debt, the companies said.