Tapestry, A Luxury American Company, Intends to Acquire Capri Holdings to Compete with European Luxury Conglomerates

The $8.5 billion agreement is a strategic initiative by Tapestry to establish a "new formidable global luxury house."

Kering and LVMH dominate the luxury conglomerate sector, both commanding a significant share of the luxury fashion and goods industry. Tapestry, the New York-based parent company of Coach, Stuart Weitzman, and Kate Spade New York, has announced its intention to acquire Capri, the owner of founder-led brands including as Jimmy Choo, Michael Kors, and Versace, as of the end of last week.

Tapestry distinctly represents American lifestyle-oriented brands, characterized as "affordable" luxury, which are youthful and contemporary, in contrast to LVMH’s European counterparts that encompass globally recognized powerhouses, including esteemed fashion houses such as Louis Vuitton and Dior, as well as Kering’s Gucci and Saint Laurent. Scale is a significant component in Tapestry's revised approach, among other key aspects.

Reuters indicates that luxury companies in the United States have "consistently lagged" behind their European counterparts in scale, so constraining their capacity to compete with LVMH and its 75 brands. The acquisition might potentially attract the affluent clients of Versace and Jimmy Choo, in addition to the younger customers of Michael Kors and Coach.

Tapestry has obtained financial support up to 8 billion dollars from Morgan Stanley and the Bank of America. The merger will result in the newly formed entity becoming the fourth largest luxury company globally, possessing a market share of approximately 5.1 percent of the luxury goods sector, as reported by AP News, with annual global sales exceeding US 12 billion and an outreach to customers in over 75 countries. Tapestry currently has a market capitalization of over 10 billion dollars, whilst Capri's market capitalization is nearly 4 billion dollars.

Tapestry CEO Joanne Crevoiserat stated, “The amalgamation of Coach, Kate Spade, and Stuart Weitzman with Versace, Jimmy Choo, and Michael Kors forms a formidable global luxury house.” Capri Chairman and CEO John Idol remarked, “By aligning with Tapestry, we will enhance our resources and capabilities to expedite the expansion of our global presence while maintaining the distinct identity of our brands.”

Under the stipulations of the all-cash agreement, Tapestry will compensate Capri stockholders US $57 per share. As reported by Reuters, the transaction is anticipated to conclude in 2024 and is projected to yield savings exceeding 200 million US dollars within three years post-closing.

In 2023, significant developments in the luxury industry are evident, with Kering acquiring a 30 percent stake in Valentino for 1.7 billion euros in July, while LVMH is poised to sponsor the 2024 Paris Olympics.