Capri stock soars 55% on a merger agreement with Tapestry

August 10, 2023 08:42 AM PDT | By Invezz

Capri stock soars 55% on a merger agreement with Tapestry — Image source: Invezz

Tapestry is paying a huge premium on Capri stock

The all-cash deal values each share of Capri Holdings at $57.

Tapestry expects an immediate boost to its cash flow and adjusted per-share earnings upon closing this transaction. Its CEO Joanne Crevoiserat said in the press release today:

The combination creates a new powerful global luxury house, unlocking a unique opportunity to drive enhanced value for our consumers, employees, communities, and shareholders around the world.

The parent company of world-known brands like Coach and Kate Spade also sees more than $200 million worth of run-rate cost synergies that it expects will realise within three years of completing this merger.

Tapestry is convinced it can turn around Michael Kors

The said acquisition will likely complete next year provided that it meets the customary closing conditions, including regulatory and shareholders’ approval.

Note that Tapestry Inc is essentially betting here on its ability to turn around Michael Kors. According to Oliver Chen – a senior Cowen analyst:

We believe Tapestry has prior turnaround capabilities, a leading customer data platform, China momentum, and can add greater cultural relevance and brand heat to Michael Kors.

The two companies, when combined, will own 6.0% of the luxury apparel and accessories market worldwide. Cowen’s Chen has a “market perform” rating on Capri stock but rates Tapestry that’s down nearly 13% this morning at “outperform”.

The post Capri stock soars 55% on a merger agreement with Tapestry appeared first on Invezz.

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