Coach parent Tapestry to buy Michael Kors owner in $8.5 billion deal

Michael Kors owner Capri will be bought by Coach parent Tapestry in an $8.5 billion deal, the companies said on 10 August, creating a top U.S. fashion house that can better compete with larger European rivals in the global luxury market.

Tapestry will pay $57 per share in cash, representing a premium of nearly 65%. Capri’s shares were trading at $51.83 in premarket trading.

U.S. luxury firms have consistently lagged their European peers such as LVMH, which owns 75 brands including U.S. jeweler Tiffany and fashion labels Louis Vuitton and Dior.

The deal would bring Tapestry’s brands, which also includes Kate Spade, together with Capri’s Jimmy Choo and Versace labels under one roof.

The combination could also provide some heft to the companies when the U.S. retail industry is battling weaker domestic demand as sticky inflation crimps consumer spending and an uneven recovery in key market China.

The weakening demand “has put pressure on Tapestry and Capri, both of which are now looking to international markets to bolster growth. There is more security in embarking on bold international plans as a larger entity,” said GlobalData Managing Director Neil Saunders.

Both companies have grown through acquisitions.

In 2017, Tapestry – then known as Coach Inc – bought handbag maker Kate Spade for $2.4 billion. In the same year, Capri, formerly known as Michael Kors, bought British shoemaker Jimmy Choo for $1.2 billion.

A year later, Capri bought Versace for $2.2 billion.

The potential acquisition of Capri could also mark a revival in deal-making in the U.S. luxury space while European majors have snapped up high-end brands.

Last month, French luxury group Kering, which is struggling to revive sales at its star brand Gucci, said it was buying a 30% stake in Italian fashion label Valentino.

LVMH, the world’s largest luxury group, closed its $15.8 billion acquisition of Tiffany in early 2021.