Tapestry to Buy Rival Capri for $8.5B in Mega Fashion Merger

Fashion conglomerate Tapestry Inc. is buying competitor Capri Holdings for $8.5 billion through a mix of equity and debt. The acquisition brings together Tapestry’s Coach, Kate Spade and Stuart Weitzman with Capri’s Michael Kors, Versace and Jimmy Choo to create a $12 billion fashion behemoth.

Tapestry will pay $57 per share in cash, representing a premium of approximately 59% to the 30-day volume weighted average price on Wednesday.

The vision for the merger is to build the global reach and geographic diversification for both companies, particularly in Europe and Asia; broaden product offering and increase penetration of lifestyle categories; and snag up a larger segment of the market with diversified cash flow.

Tapestry has secured $8 billion in bridge financing from Bank of America N.A. and Morgan Stanley Senior Funding, Inc. The purchase is expected to be funded by a combination of senior notes, term loans, and cash, a portion of which will be used to pay some of Capri’s existing debt.

The companies said within three years of closing the deal, they expect to save over $200 million in cost synergies.

“The acquisition of Capri Holdings accelerates our strategic agenda and represents a significant value creation opportunity. Importantly, this combination is immediately accretive on an adjusted basis and enhances Tapestry’s total shareholder return,” CFO and COO, Scott Roe.

Morgan Stanley & Co LLC is serving as Tapestry, Inc.’s exclusive financial advisor and Latham & Watkins LLP is its legal advisor. Capri Holdings Limited’s financial advisor is Barclays and its legal advisor is Wachtell, Lipton, Rosen & Katz.