Tapestry to acquire rival fashion company Capri Holdings for $8.5bn

Tapestry, Inc. (NYSE: TPR) and Capri Holdings Limited (NYSE: CPRI) have entered into a definitive agreement, under which Tapestry will purchase Capri Holdings for an enterprise value of $8.5 billion. This monumental deal values Capri Holdings shares at $57 each, fully in cash.

A Union of Iconic Fashion Brands

This acquisition combines six globally renowned brands, generating over $12 billion in worldwide annual sales and securing a presence in more than 75 countries.

Joanne Crevoiserat, CEO of Tapestry, Inc., expressed her enthusiasm for the merger, stating, “The acquisition of Capri Holdings – uniting six iconic brands and exceptional global teams… creates a new powerful global luxury house.” John D. Idol, CEO of Capri Holdings Limited, echoed this sentiment, highlighting the achievement of building their brands into luxury fashion powerhouses.

Tapestry to Broaden Luxury Brand Portfolio with Capri Holdings Acquisition. Photo courtesy of Business Wire.

Financial Impacts and Strategic Synergies

Scott Roe, Tapestry, Inc.’s CFO and COO, remarked on the financial advantages of this acquisition. Emphasizing the over $200 million expected in cost synergies within three years and the focus on shareholder value, he shared, “The acquisition of Capri Holdings accelerates our strategic agenda and represents a significant value creation opportunity.”

This acquisition augments Tapestry’s reach in the $200+ billion global luxury market, leveraging both companies’ strengths, especially in Asia and Europe. Key synergies include extending global reach, broadening product offerings, and leveraging Tapestry’s advanced consumer engagement platform.

Transaction Specifics and Future Projections

Both Tapestry and Capri Holdings’ Boards have approved the deal, aiming for a 2024 closure. The all-cash offer comes at a premium of about 59% to Capri’s 30-day volume weighted average price as of August 9, 2023. Funding will be sourced from senior notes, term loans, and Tapestry’s cash reserves. Moreover, Tapestry has confirmed its commitment to maintaining an Investment Grade Rating.

Advisory Support for the Deal

Morgan Stanley & Co LLC is the exclusive financial advisor for Tapestry, Inc., while Latham & Watkins LLP is its legal consultant. Capri Holdings Limited has engaged Barclays as its financial advisor and Wachtell, Lipton, Rosen & Katz as its legal advisor.