Summer 2023: reasons behind luxury groups’ buying fever
On August 10, Tapestry announced that it had acquired Capri Holdings for $8.5 billion, positioning itself as a new luxury goods titan in the face of LVMH and Kering. The merger strengthens the holding's presence in the European market. On a broader level, the buying fever that is sweeping through all luxury groups is synonymous with the need to diversify in the face of one crisis after another.
By Eva Morletto16 août 2023
Tapestry, the American luxury holding based in New York, has just confirmed the acquisition of Capri Holdings, the group that owns the famous brands Michael Kors, Versace, and Jimmy Choo. The definitive agreements stipulate that shareholders can receive $57 per share in cash, and the enterprise value stands at $8.5 billion.
This coming together positions Tapestry favorably to compete with giants like LVMH or Kering. With a total annual sales exceeding $12 billion and a presence in over 75 countries, this new luxury powerhouse combines the strengths of Tapestry - already the owner of Coach New York, Kate Spade New York, and Stuart Weitzman - with those of Capri Holdings. The markets have reacted strongly to the announcement: Capri Holdings showed a remarkable 56% surge in the stock market, which should further bolster the company's financial strength. The acquisition contract will become tangible and effective by the end of 2024, subject to the approval of Capri Holdings shareholders and regulators.
According to GlobalData analysts, this merger will propel Tapestry to the fourth position among the largest luxury groups in the world, with a market share of slightly over 5%, trailing behind French giants LVMH, Chanel, and Kering. With the decrease in inflation boosting demand, international markets offer major players like Tapestry an opportunity to strengthen their position. The group aims to expand its brand portfolio and acquire crucial customer data to compete with major European fashion houses.
John Idol, CEO of Capri Holdings, sees this merger as a geographical complement coupled with a portfolio of brand complements. While 65% of Tapestry's sales come from America and 29% from Asia, Capri Holdings has a significant presence in Europe, with a sales breakdown of 56% in America, 16% in Asia, and 28% in Europe/Middle East.
In terms of jobs, the merger of Tapestry and Capri Holdings will give rise to a true giant, employing over 33,000 people worldwide.
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