Coach fashion house Tapestry buys Michael Kors parent Capri Holdings for $8.5B

Aug. 10 (UPI) -- Tapestry Inc., the owner of U.S. lifestyle fashion brand Coach, announced an $8.5 billion takeover of luxury fashion house Capri Holdings, which counts Versace, Jimmy Choo and Michael Kors among its stable.

The merger unites six distinct brands across different market segments in 75 countries with $200 million in cost-saving synergies to create a company with more than $12 billion in revenue and nearly $2 billion operating profit, Tapestry said in a news release.

Under the deal, Capri shareholders will receive $57 a share, a premium of around 59% to the current share price, which Tapestry will fund via a mix of debt, loans and cash, some of which will go to clear Capri's outstanding debts.

Tapestry, whose stable also includes the Kate Spade and Stuart Weitzman brands, secured an $8 billion bridging loan from Bank of America and Morgan Stanley, pending the structuring of the acquisition funding.

Tapestry CEO Joanne Crevoiserat said the newly formed global company with 33,000 employees would fuel the company's ambition to leverage its competitive advantage across a wider 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," said Crevoiserat.

Capri chairman and CEO John D. Idol called the merger a "major milestone" and a testament to his teams' development of Versace, Jimmy Choo, and Michael Kors into "iconic and powerful luxury fashion houses."

"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," Idol said.

Both firms are listed on the New York Stock Exchange with Tapestry scheduled to report fourth quarter and full year 2023 results Aug. 17, while Capri was scheduled to publish higher than expected revenue and earnings in its expedited first quarter fiscal 2024 results later Thursday.