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Tapestry's US$8.5 Billion takeover of Versace owner sparks share reactions

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2023-08-11

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Tapestry, the US-based parent company of lifestyle brands Coach and Kate Spade, is set to acquire the parent company of Versace and Michael Kors, Capri, in a momentous US$8.5 billion takeover, giving rise to a new global fashion behemoth poised to challenge European fashion giants.

In response to the acquisition announcement, Capri's shares experienced a meteoric rise of 56 percent overnight, reflecting investor optimism, while shares of Tapestry took a 16 percent dip. The newly formed conglomerate will also encompass Tapestry’s Stuart Weitzman and Capri’s Jimmy Choo, both renowned shoe brands, alongside the iconic Versace, favoured by Hollywood A-listers for their red carpet appearances.

The strategic merger positions Tapestry with a premium portfolio boasting multiple brands focusing on shoes and handbags, alongside a reinforced apparel segment featuring Versace and Kors, both celebrated among celebrities. "This merger creates a new powerful global luxury house," affirmed Joanne Crevoiserat, Chief Executive of Tapestry.

The all-cash takeover strategy aims to fuel sales growth through the fusion of customer data streams, an expanded global presence, and the realisation of approximately US$200 million in annual cost savings within three years of the deal's finalisation, according to a joint press release.

Executives from both entities emphasised Tapestry's robust direct-to-consumer business as a potential avenue for growth for Capri, which currently generates more sales in Europe in comparison to Tapestry, which holds a stronger position in the Asian market. Notably, both conglomerates heavily rely on the Americas for the majority of their sales, as highlighted in a presentation by Tapestry.

This high-profile takeover signals a strategic move by Tapestry to fortify its position within the luxury fashion industry and harness synergies across a diverse portfolio of brands, setting the stage for intensified competition on the global fashion stage.

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