Tapestry Inc., the owner of brands including Coach and Kate Spade, agreed to acquire Michael Kors parent Capri Holdings Ltd. in an $8.5 billion deal that shows the wave of consolidation in the luxury goods sector is far from finished.
The New York-based firm is paying a $57 per share in cash, according to a statement Thursday, a 65% premium over Capri’s last closing price. The transaction is expected to close in 2024, subject to approval by regulators and Capri shareholders.
“We are confident this combination will deliver immediate value to our shareholders,” Capri Chief Executive Officer John Idol said in the statement. “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.”
Tapestry shares fell as much as 6% in early trading before paring their decline. Capri was up 59%.
Capri’s shares have tumbled recently as a pullback in spending by US consumers in department stores dented sales of the mass-market Michael Kors brand. The company, which also owns upscale names Versace and Jimmy Choo, had fallen around 31% in the past 12 months.
Capri, also based in New York, had been scheduled to report fiscal first-quarter earnings on Aug. 8. The company announced it would reschedule the earnings for Thursday, without explanation. The two companies will hold a joint conference call at 8 a.m. New York time.
Luxury giants have been snapping up smaller brands even as inflation has potentially darkened the outlook for discretionary spending. Cosmetics firm Estée Lauder Cos. took over Tom Ford in a $2.8 billion deal announced last year and completed in April. Kering SA, which had held talks to buy Tom Ford before it was sold to Estée Lauder, agreed a deal last month for a 30% stake in fashion house Valentino for around $1.9 billion. Kering also agreed in June to acquire perfume maker Creed at an undisclosed valuation.
Meanwhile, Tapestry benefited from a stronger-than-expected rebound in China sales in the quarter ended April 1. The company, which also owns the Stuart Weitzman brand, expects mid-single-digit sales growth in China in its current fiscal year. Tapestry’s shares have climbed nearly 20% in the past year, valuing the firm at about $9.6 billion
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