CPRI: Versace Owner Capri Agrees $8.5bn Buyout by Tapestry. Stock Surges 55%.

The buyer’s shares dropped 16% as Wall Street expressed doubts over demand prospects – a growing pain for the luxury giant.

• Capri, the luxury holding company founded by Michael Kors, and boasting brands such as Versace and Jimmy Choo, has agreed to be acquired by bigger rival Tapestry. The deal is valued at $8.5bn, or $57 a share in cash, a lofty 65% premium to Wednesday’s closing price. Investors went all in on Capri shares CPRI, shooting the stock higher by 55% on the day.
• On the buy side is Tapestry, parent company of Coach and Kate Spade, which is aiming to snap up a larger share of the global market for luxury goods. Wall Street didn’t seem to think so. Investors rushed to sell the company’s stock TPR, erasing a 16% chunk of its valuation on worries that demand could suffer over higher prices.
• The mega merger seeks to position Tapestry as a solid US-based competitor to undisputed luxury heavyweight LVMH MC. For that to happen, the buy needs to close by August 10, 2024, or either company can choose to walk away from the deal.