Tapestry, the parent company of U.S. fashion brand Coach, has decided to acquire Capri Holdings, which has Michael Kors and Versace.
According to AP and Reuters on the 10th (local time), the acquisition price is $8.5 billion. Tapestry will acquire a stake in Capri Holdings for $57 per share in cash. This is a premium of about 65% compared to Capri Holdings’s closing price of $34.61.
Shares of Capri Holdings are trading at $51.83 in after-hours trading on the New York Stock Exchange (NYSE), Reuters said.
Capri Holdings is a company founded by American fashion designer Michael Kors. He has brands such as Michael Kors, who is named after him, Versace, and Jimmy Choo.
Earlier in the day, the Wall Street Journal (WSJ) reported that Tapestry’s acquisition of Capri Holdings is imminent, and said Capri Holdings’ market value is about $4 billion.
Capri Holdings, which grew rapidly with a popular luxury strategy, peaked at $20 billion in corporate value in 2014, but has since fallen due to the sluggish performance of its flagship brand Michael Kors and the sluggish performance of its acquired brand.
Capri Holdings’ stock price has fallen about 40% this year due to sluggish sales.
Tapestry, the underwriter, has brands such as Kate Spade and Stuart Weitzman in addition to the coach. Annual sales exceed $12 billion and the market value is about $10 billion.
WSJ said Tapestry’s acquisition of Capri Holdings is the largest M&A deal in the fashion industry in recent years.
Tapestry tried to increase its brand house size in order to increase its competitiveness against European luxury giants such as Louis Vuitton Moe Hennessy (LVMH) and Gucci’s parent company, Kering, and the acquisition has established a better position than before, according to foreign media.
