(New York) A new global luxury giant should see the light of day in 2024 thanks to the marriage announced Thursday of the brands Coach, Kate Spade, Stuart Weitzman with Michael Kors, Versace and Jimmy Choo, brands worn by an array of celebrities on the carpets red.
US Tapestry Group (Coach, Kate Spade, Stuart Weitzman) has announced the signing of a “definitive agreement” to buy Capri, parent company of Michael Kors, Versace and Jimmy Choo.
The new group will be proud of the very long list of artists and other stars who choose its brands, such as Bella Hadid (ambassador of Michael Kors and Versace), Nicole Kidman, Taylor Swift, Angelina Jolie or Heidi Klum, Lizzo, Olivia Cooke, Jennifer Lopez.
“The association of Coach, Kate Spade, and Stuart Weitzman with Versace, Jimmy Choo and Michael Kors creates a new powerful and global luxury house,” commented Joanne Crevoiserat, boss of Tapestry, quoted in a press release.
According to GlobalData analyst Neil Saunders, the new group is expected to become the fourth largest luxury group in the world with a market share of around 5.1% behind French giants LVMH, Kering and Chanel.
In the Americas region alone, it would be in second place (6%), far behind LVMH (21.4%).
Cumulative revenue exceeds $12 billion.
The $8.5 billion transaction is expected to be finalized in 2024.
“American luxury companies have long looked upon their European counterparts with envy,” Saunders noted, pointing out that it was the “willingness to do the same” that drove Tapestry and Capri to unite several separate brands.
“Tapestry’s acquisition of Capri is the next logical step on the path to creating a powerful global luxury house,” he said.
Both boards have unanimously approved the merger, but it remains pending approval from Capri shareholders and regulatory authorities.
John Idol, boss of Capri, assured that by joining Tapestry “we will have greater resources and capabilities to accelerate our internationalization while preserving the unique DNA of our brands”.
“This is a major milestone for Capri,” he said.
The two companies are “very complementary” in terms of geographic distribution, with one having a greater presence in Asia—Tapestry does 65% of its business in America and 29% in Asia—and the other with a greater presence in Europe—Capri generates 56 % in America, 28% in Europe/Middle East and 16% in Asia.
“We can learn a lot from how they’ve built their brands in Europe,” Ms. Crevoiserat said in a conference call with analysts, adding that Michael Kors was a “strong brand” with “a younger consumer base and more varied”.
The new entity will employ more than 33,000 people.
“The scale and synergies make it a good deal,” TD Cowen analysts said in a note titled “The eloquence of luxury (Tapestry) adds glamor (Capri)—a fascinating pairing.”
Around 12:30 p.m. (Eastern Time), Tapestry stock fell 14.14% to $35.41 on the New York Stock Exchange. According to Zachary Warring of CFRA, this drop is explained by the suspension of share buybacks.
Capri’s jumped 56.37% to $54.12, approaching the offer price.
