- Unites Six Distinctive Brands, Expanding Portfolio Reach
Across Consumer Segments, Geographies, and Product
Categories
- Combined Company Generated Over $12 Billion in Revenue and
Nearly $2 Billion in Adjusted Operating Profit in the Prior Fiscal
Year
- Significant Cost Synergy Opportunity of Over $200 Million on
a Run-Rate Basis
- Acquisition Expected to be Immediately Accretive to
Tapestry’s EPS on an Adjusted Basis
- Tapestry Board of Directors Approves an Increase in the
Company’s Dividend
Link to Investor Presentation
Tapestry, Inc. (NYSE: TPR), a house of iconic accessories and
lifestyle brands consisting of Coach, Kate Spade, and Stuart
Weitzman, and Capri Holdings Limited (NYSE: CPRI), a global fashion
luxury group consisting of Versace, Jimmy Choo, and Michael Kors,
today announced that they have entered into a definitive agreement
under which Tapestry will acquire Capri Holdings. 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.
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the full release here:
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This acquisition brings together six highly complementary brands
with global reach, powered by Tapestry’s data-rich customer
engagement platform and diversified, direct-to-consumer operating
model. The combined company generated global annual sales in excess
of $12 billion with a presence in over 75 countries and achieved
nearly $2 billion in adjusted operating profit in the prior fiscal
year.
Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc.,
said, “We are excited to announce the acquisition of Capri Holdings
– uniting six iconic brands and exceptional global teams. Tapestry
is an organization with a passion for building enduring brands
through superior design and craftsmanship and an unwavering focus
on our customers. Importantly, we’ve created a dynamic, data-driven
consumer engagement platform that has fueled our success, fostering
innovation, agility, and strong financial results. From this
position of strength, we are ready to leverage our competitive
advantages across a broader portfolio of brands. The combination of
Coach, Kate Spade, and Stuart Weitzman together with Versace, Jimmy
Choo, and Michael Kors 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.”
John D. Idol, Chairman and Chief Executive Officer of Capri
Holdings Limited, said, “Today’s announcement marks a major
milestone for Capri. It is a testament to all that our teams have
achieved in building Versace, Jimmy Choo, and Michael Kors into the
iconic and powerful luxury fashion houses they are today. We are
confident this combination will deliver immediate value to our
shareholders. It will also provide new opportunities for our
dedicated employees around the world as Capri becomes part of a
larger and more diversified company. 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.”
Tapestry, Inc.’s Chief Financial Officer and Chief Operating
Officer, Scott Roe, said, “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. This includes more than $200 million in
expected run-rate cost synergies within three years of deal
closing. Further, our diversified, strong, and consistent cash
flows will allow us to continue to invest in our business and
rapidly pay down debt – aligned with our commitment to maintaining
an investment grade rating – while returning capital to
shareholders, including today’s announced 17% increase in our
dividend per share. Overall, we are disciplined financial operators
and allocators of capital with a relentless drive to deliver
meaningful shareholder value.”
Compelling Strategic Combination and
Financial Rationale
The acquisition of Capri Holdings builds on Tapestry’s core
tenets as consumer-centric brand-builders and disciplined
operators, accelerating its strategic and financial growth agenda.
The combination:
Expands Portfolio Reach and Diversification Across Consumer
Segments, Geographies, and Product Categories
- Establishes a powerful house of iconic luxury and fashion
brands across consumer segments globally
- Builds Tapestry’s portfolio in the attractive and resilient
$200+ billion global luxury market for handbags, accessories,
footwear, and apparel, where the company has deep experience and
expertise, while providing deeper access to luxury consumers and
market segments
- Extends global reach and geographic diversification given the
Tapestry and Capri Holdings highly complementary respective
positions in Asia and Europe
- Broadens Tapestry’s product offering through an increased
penetration of lifestyle categories, notably footwear and
ready-to-wear, where Capri Holdings brings extensive expertise with
further opportunity for growth
Leverages Tapestry’s Consumer Engagement Platform to Drive
Direct-to-Consumer Opportunity
- Leverages Tapestry’s customer engagement platform, data
analytics capabilities, and modern technology infrastructure to
drive deeper consumer connections
- Creates opportunity to further leverage Tapestry’s proven and
profitable Direct-to-Consumer model with the goal of increasing
Capri Holdings’ Direct-to-Consumer penetration over time
Unlocks Opportunity for Significant Cost Synergies
- Expect to realize over $200 million in run-rate cost synergies
within three years post-closing, supported by operating cost
savings and supply chain efficiencies
Generates Highly Diversified, Strong, and Consistent Cash
Flow
- Builds portfolio in durable, high-margin categories where
Tapestry has best-in-class operational execution, enhancing strong
and consistent cash flow
- Generates significant cash flow that enables rapid deleverage,
while continuing to reinvest in the business
Powers Continued Progress as a Purpose-Led, People-Centered
Company
- Brings together more than 33,000 passionate employees around
the world with shared values of innovation, inclusivity, and
creativity, providing new opportunities for internal career
mobility and growth
- The combined company will be well-positioned to advance a
comprehensive and impactful ESG strategy focused on a shared
mission to drive progress toward a more sustainable, equitable, and
inclusive future. Importantly, as part of this commitment, Tapestry
will continue to invite its employees to contribute their unique
perspective to create a culture that is growing, dynamic, and
diverse
Creates Path to Deliver Enhanced Total Shareholder Returns
(TSR)
- Expected to deliver significant financial returns, including
strong double-digit EPS accretion on an adjusted basis and
compelling ROIC
- Accretive to Tapestry’s existing standalone TSR plan,
underscoring the company’s financial discipline and commitment to
value creation
- Continued commitment to capital return, with Tapestry’s Board
of Directors approving a 17% increase to its quarterly dividend per
share, resulting in an anticipated payout of $1.40 per share or
approximately $325 million in Fiscal Year 2024
Transaction Details
The Boards of Directors of each of Tapestry, Inc. and Capri
Holdings Limited have unanimously approved the transaction. The
transaction is anticipated to close in calendar year 2024, subject
to approval by the Capri Holdings shareholders, as well as the
receipt of required regulatory approvals, and other customary
closing conditions.
The all-cash offer for Capri Holdings of $57.00 per share
represents a premium of approximately 59% to the 30-day volume
weighted average price ending August 9, 2023. The total enterprise
value of the transaction of approximately $8.5 billion represents a
9x adjusted EBITDA multiple on a trailing-twelve-month basis, or 7x
including expected synergies.
The transaction is not subject to a financing condition.
Tapestry has secured $8.0 billion in fully committed bridge
financing from Bank of America N.A. and Morgan Stanley Senior
Funding, Inc. The purchase price of approximately $8.5 billion is
expected to be funded by a combination of senior notes, term loans,
and excess Tapestry cash, a portion of which will be used to pay
certain of Capri’s existing outstanding debt.
Importantly, Tapestry has engaged with the rating agencies and
is committed to a solid Investment Grade Rating. Tapestry will
suspend its share repurchase activity to prioritize de-leveraging
via debt reduction and anticipates reaching a leverage ratio of
below 2.5x Debt/EBITDA within 24 months post-close. Furthermore,
Tapestry is instituting a long-term leverage target of under 2.5x
Debt/EBITDA.
Advisors
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.
Conference Call Details
Tapestry, Inc. and Capri Holdings Limited will host a joint
conference call to discuss the transaction at 8:00 a.m. (ET) today,
August 10, 2023. Interested parties may listen to the conference
call via live webcast by accessing www.tapestry.com/investors or
www.capriholdings.com or by calling 1-866-847-4217 or
1-203-518-9845 and providing the Conference ID 630423. A telephone
replay will be available starting at 12:00 p.m. (ET) today for at
least 90 business days. To access the telephone replay, please call
1-888-562-2849 or 1-402-220-7359. A webcast replay of the earnings
conference call will also be available for at least 90 business
days on the Tapestry website. Presentation slides have also been
posted to Tapestry’s website at www.tapestry.com/investors.
Upcoming Events
Tapestry, Inc. is scheduled to report fiscal fourth quarter and
full year 2023 results on Thursday, August 17th. Tapestry expects
to report annual revenue and earnings per diluted share consistent
with its previously issued guidance range.
Due to the announcement of the transaction, Capri Holdings
Limited will not hold its previously scheduled earnings call and
will publish its financial results for the first quarter of fiscal
2024 after the market close today, August 10th, via press release.
Capri Holdings expects to report revenue and earnings per diluted
share for its first fiscal quarter 2024 slightly above its
previously issued guidance range. Capri Holdings does not intend to
provide a financial outlook moving forward. The press release will
be available on the Investor Relations page of the Capri Holdings
Limited website.
About Tapestry, Inc.
Our global house of brands unites the magic of Coach, Kate Spade
New York and Stuart Weitzman. Each of our brands are unique and
independent, while sharing a commitment to innovation and
authenticity defined by distinctive products and differentiated
customer experiences across channels and geographies. We use our
collective strengths to move our customers and empower our
communities, to make the fashion industry more sustainable, and to
build a company that’s equitable, inclusive, and diverse.
Individually, our brands are iconic. Together, we can stretch
what’s possible. To learn more about Tapestry, please visit
www.tapestry.com. For important news and information regarding
Tapestry, visit the Investor Relations section of our website at
www.tapestry.com/investors. In addition, investors should continue
to review our news releases and filings with the SEC. We use each
of these channels of distribution as primary channels for
publishing key information to our investors, some of which may
contain material and previously non-public information. The
company’s common stock is traded on the New York Stock Exchange
under the symbol TPR.
About Capri Holdings
Limited
Capri Holdings is a global fashion luxury group consisting of
iconic, founder-led brands Versace, Jimmy Choo and Michael Kors.
Our commitment to glamorous style and craftsmanship is at the heart
of each of our luxury brands. We have built our reputation on
designing exceptional, innovative products that cover the full
spectrum of fashion luxury categories. Our strength lies in the
unique DNA and heritage of each of our brands, the diversity and
passion of our people and our dedication to the clients and
communities we serve. Capri Holdings Limited is publicly listed on
the New York Stock Exchange under the ticker CPRI.
Forward-Looking Statements
This communication relates to a proposed business combination
transaction between Tapestry, Inc. and Capri Holdings Limited
(“Capri”). This communication includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements relate to future events and anticipated results of
operations, business strategies, the anticipated benefits of the
proposed transaction, the anticipated impact of the proposed
transaction on the combined company’s business and future financial
and operating results, the expected amount and timing of synergies
from the proposed transaction, the anticipated closing date for the
proposed transaction and other aspects of our operations or
operating results. These forward-looking statements generally can
be identified by phrases such as “will,” “expects,” “anticipates,”
“foresees,” “forecasts,” “estimates” or other words or phrases of
similar import. It is uncertain whether any of the events
anticipated by the forward-looking statements will transpire or
occur, or if any of them do, what impact they will have on the
results of operations and financial condition of the combined
companies or the price of Tapestry, Inc. or Capri stock. These
forward-looking statements involve certain risks and uncertainties,
many of which are beyond the parties’ control, that could cause
actual results to differ materially from those indicated in such
forward-looking statements, including but not limited to: the
effect of the announcement of the merger on the ability of
Tapestry, Inc. or Capri to retain and hire key personnel and
maintain relationships with customers, suppliers and others with
whom Tapestry, Inc. or Capri do business, or on Tapestry, Inc.’s or
Capri’s operating results and business generally; risks that the
merger disrupts current plans and operations and the potential
difficulties in employee retention as a result of the merger; the
outcome of any legal proceedings related to the merger; the ability
of the parties to consummate the proposed transaction on a timely
basis or at all; the satisfaction of the conditions precedent to
consummation of the proposed transaction, including the ability to
secure regulatory approvals on the terms expected, at all or in a
timely manner; the ability of Tapestry, Inc. to successfully
integrate Capri’s operations; the ability of Tapestry, Inc. to
implement its plans, forecasts and other expectations with respect
to Tapestry, Inc.’s business after the completion of the
transaction and realize expected synergies; and business disruption
following the merger. For additional information about other
factors that could cause actual results to differ materially from
those described in the forward-looking statements, please refer to
Tapestry, Inc.’s and Capri’s respective periodic reports and other
filings with the SEC, including the risk factors identified in
Tapestry, Inc.’s and Capri’s most recent Quarterly Reports on Form
10-Q and Annual Reports on Form 10-K. The forward-looking
statements included in this communication are made only as of the
date hereof. Neither Tapestry, Inc. nor Capri undertakes any
obligation to update any forward-looking statements to reflect
subsequent events or circumstances, except as required by law.
No Offer or Solicitation
This communication is not intended to and shall not constitute
an offer to buy or sell or the solicitation of an offer to buy or
sell any securities, or a solicitation of any vote or approval, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made, except by
means of a prospectus meeting the requirements of Section 10 of the
U.S. Securities Act of 1933, as amended.
Additional Information and Where to Find It
This communication relates to the proposed transaction involving
Capri Holdings Limited (“Capri”). In connection with the proposed
transaction, Capri will file relevant materials with the U.S.
Securities and Exchange Commission (the “SEC”), including Capri’s
proxy statement on Schedule 14A (the “Proxy Statement”). This
communication is not a substitute for the Proxy Statement or for
any other document that Capri may file with the SEC and send to its
shareholders in connection with the proposed transaction. The
proposed transaction will be submitted to Capri’s shareholders for
their consideration. Before making any voting decision, Capri’s
shareholders are urged to read all relevant documents filed or to
be filed with the SEC, including the Proxy Statement, as well as
any amendments or supplements to those documents, when they become
available because they will contain important information about the
proposed transaction.
Capri’s shareholders will be able to obtain a free copy of the
Proxy Statement, as well as other filings containing information
about Capri, without charge, at the SEC’s website (www.sec.gov).
Copies of the Proxy Statement and the filings with the SEC that
will be incorporated by reference therein can also be obtained,
without charge, by directing a request to Capri Holdings Limited,
90 Whitfield Street, 2nd Floor, London, United Kingdom W1T 4EZ,
Attention: Investor Relations; telephone +1 (201) 514-8234, or from
Capri’s website www.capriholdings.com.
Participants in the Solicitation
Capri and certain of its directors, executive officers and
employees may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information
regarding Capri’s directors and executive officers is available in
Capri’s proxy statement for its 2023 annual meeting of
shareholders, which was filed with the SEC on June 15, 2023. Other
information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the Proxy
Statement and other relevant materials to be filed with the SEC in
connection with the proposed transaction when they become
available. Free copies of the Proxy Statement and such other
materials may be obtained as described in the preceding
paragraph.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809944810/en/
Tapestry, Inc. Media: Andrea Shaw Resnick Chief
Communications Officer 212/629-2618 aresnick@tapestry.com
Analysts and Investors: Christina Colone Global Head of Investor
Relations 212/946-7252 ccolone@tapestry.com
Kelsey Mueller 212/946-8183 Director of Investor Relations
kmueller@tapestry.com
Capri Holdings Limited Investor Relations: Jennifer Davis
201/514-8234 Jennifer.Davis@CapriHoldings.com
Media: Press@CapriHoldings.com
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