Tapestry buys Versace, Jimmy Choo, and Michael Kors owner Capri Holdings for $8.5 billion.

Big fashion is getting bigger: Challenging European luxury juggernauts like LVMH and Kering, Tapestry, Inc. (NYSE: TPR), a New York-based house of modern luxury lifestyle brands including Coach, Kate Spade, and Stuart Weitzman, has acquired Capri Holdings Limited (NYSE: CPRI), the parent company of Versace, Jimmy Choo, and Michael Kors, for $8.5 billion.

This merger will create a new entity with more than $12 billion in annual sales across 75 countries, under the name Tapestry. The boards of both companies have approved the deal, which is expected to be finalized next year.

“The combination of Coach, Kate Spade, and Stuart Weitzman together with Versace, Jimmy Choo, and Michael Kors creates a new powerful global luxury house,” Tapestry CEO Joanne Crevoiserat said.

“By joining with Tapestry, we will have greater resources and capabilities to accelerate the expansion of our global reach while preserving the unique DNA of our brands,” Capri Holdings Chairman and CEO John Idol said.

Tapestry, founded in 1941, has a market cap of nearly $8 billion, while Capri’s is around $6.3 billion.

In the race to build America’s first-ever luxury conglomerate, Michael Kors Holdings, now renamed Capri Holdings Limited (NYSE: CPRI), acquired the world-famous Italian fashion house Versace in September 2018 for $2.1 billion. The group previously acquired Jimmy Choo in July 2017 for $1.2 billion.

Once completed, the new entity will be the fourth largest luxury company in the world, with a combined market share of around 5.1% of the luxury goods market. In the Americas, the company will become the second largest luxury player behind LVMH (Louis Vuitton Moët Hennessy), with a combined share of 6% of the luxury goods market.

The latest merger in the sector is still smaller than the largest-ever deal, which occurred in October 2020 when LVMH acquired Tiffany & Co. for almost $16 billion.

LVMH is a French luxury group that was created in 1987 through the merger of Louis Vuitton, Moët & Chandon, and Hennessy. The company owns 75 different brands in six sectors, including fashion houses such as Christian Dior, Givenchy, Marc Jacobs, Fendi, and Stella McCartney; jewelry company Bulgari; cosmetics retailer Sephora; and alcoholic beverage companies Belvedere and Dom Pérignon.

The company boasts a $462 billion market cap, and the man behind the curtain is French business magnate Bernard Arnault. Arnault has a net worth of $226.2 billion, and his wealth is largely tied to LVMH shares, including a 97.5% stake in Dior.

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