Coach parent company, Tapestry, has made a groundbreaking announcement of its plans to acquire Capri, the owner of Michael Kors, in a monumental $8.5 billion deal. This strategic move aims to establish a dominant force in the U.S. fashion industry, allowing the newly merged entity to better compete with its larger European counterparts in the global luxury market.

Under the terms of the deal, Tapestry will pay an impressive $57 per share in cash, representing an outstanding premium of nearly 65% compared to Capri’s shares, which were trading at $51.83 in premarket trading. This acquisition will bring together Tapestry’s impressive portfolio of brands, which includes the popular Kate Spade label, with Capri’s well-known Jimmy Choo and Versace labels.

The strategic combination of these prestigious brands has the potential to provide the companies with a significant advantage, especially as the U.S. retail industry grapples with challenges arising from weaker domestic demand and persistent inflation that is impacting consumer spending. Moreover, the uneven recovery in key markets such as China has further intensified the pressure on companies like Tapestry and Capri to explore growth opportunities beyond their domestic borders.

Neil Saunders, the Managing Director of GlobalData, highlights that the weakening demand has compelled both Tapestry and Capri to shift their focus towards international markets for growth. The consolidation of the two companies as a larger entity could offer more stability, while empowering them to embark on ambitious international expansion plans.

This deal follows the longstanding trend of growth through acquisitions for both Tapestry and Capri. In 2017, Tapestry, formerly known as Coach Inc, made waves by acquiring handbag maker Kate Spade for an impressive $2.4 billion. In the same year, Capri, previously known as Michael Kors, made headlines with its purchase of British shoemaker Jimmy Choo for a notable $1.2 billion. A year later, Capri solidified its presence in the luxury market by acquiring Versace for a significant $2.2 billion.

The potential acquisition of Capri by Tapestry not only solidifies the American luxury fashion industry but also strategically positions them for enhanced competitiveness on the global stage. By combining their respective brands, Tapestry and Capri can leverage their joint expertise and resources to unlock significant growth opportunities and establish a stronger foothold in the luxury market.

Useful links:
– [Tapestry](https://www.tapestry.com)
– [Capri](https://www.capri.com)