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 — while still not quite as large as its European competitors — 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 to just under the per-share deal price, while shares of Tapestry roughly 4%.

Tapestry has pushed to elevate its brands and appeal to a new generation of shoppers. At Coach, for example, it has collaborated with popular brands and celebrities like Disney and Kirsten Dunst and debuted handbags that have resonated with Gen Z customers who discover items on TikTok.

Coach also narrowed the number of items it carries to the focus on best-sellers, keeping price points high by reducing markdowns. It’s started to run a similar playbook with Kate Spade.

Tapestry has also looked other parts of the world to drive growth, such as chasing higher sales in China.

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

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.