$Tapestry Inc.(TPR)$ , which includes popular brands like Coach, Kate Spade, and Stuart Weitzman, is acquiring $Capri Holdings Ltd(CPRI)$ Holdings, a global fashion luxury group consisting of Versace, Jimmy Choo, and Michael Kors.

The deal would create an American fashion giant that brings Coach, Kate Spade, Stuart Weitzman, Versace, Jimmy Choo and Michael Kors under one house.

Highlights of $Tapestry Inc.(TPR)$’s takeover offer

“Under the terms of the transaction Capri Holdings shareholders will receive $57.00 per share in cash for a total enterprise value of approximately $8.5 billion.”

In reference, Capri’s stock price surged 55.74% on the acquisition news to $53.9, very close to the offered price of $57.

The deal may close in 2024 and depend on approval of multi parties

The transaction has received unanimous approval from the Boards of Directors of both companies and is expected to close in calendar year 2024, pending shareholder approval from Capri Holdings, regulatory approvals, and other customary closing conditions.

Transaction funding comes from:

“The transaction is not subject to a financing condition.”

Tapestry has secured bridge financing of $8.0 billion from Bank of America N.A. and Morgan Stanley Senior Funding, Inc., and will use a combination of senior notes, term loans, and excess Tapestry cash to fund the purchase price.

Tapestry will suspend its share repurchase activity to prioritize de-leveraging via debt reduction. Tapestry has engaged with the rating agencies and is committed to a solid Investment Grade Rating.

In response to the news, $Tapestry Inc.(TPR)$ shares plunged -15.93%.

Better positioned to compete with other luxury empires

Tapestry CEO Joanne Crevoiserat said

 the combination pulls together “six iconic brands” that have a presence in more than 75 countries and drive over $12 billion in annual revenue.

In comparison, the combined company still lags behind the luxury giants like $LVMH-Moet Hennessy Louis Vuitton(LVMHF)$ , $KERING SA(0IIH.UK)$ , $Compagnie Financiere Richemont AG(CFRUY)$

LVMH generated $85.9 billion in revenue during 2022 and profits from recurring operations reached $22.9 billion.

In 2022, Kering's global revenue amounted to about $22.4 billion.

In 2022, total sales of the Richemont Group worldwide amounted to about $18.4 billion.

However, the transaction will create an American fashion giant that — while still not quite as large as its European competitors — will be better positioned to compete in the luxury market.

Are you bullish on $Tapestry Inc.(TPR)$ and $Capri Holdings Ltd(CPRI)$ ‘s merger?

Which luxury brand do you pick?

The six brands of the combined company or others?

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