Tapestry to acquire Capri Holdings for $57.00 per share in cash
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Tapestry to acquire Capri Holdings for $57.00 per share in cash

Tapestry (TPR) and Capri Holdings Limited (CPRI) 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 $8.5B. 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 $12B with a presence in over 75 countries and achieved nearly $2B in adjusted operating profit in the prior fiscal year. 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: Unlocks Opportunity for Significant Cost Synergies: Expect to realize over $200M 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; Creates Path to Deliver Enhanced Total Shareholder Returns: 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 $325M on in Fiscal Year 2024. 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 $8.5B 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 $8B in fully committed bridge financing from Bank of America N.A. and Morgan Stanley Senior Funding, Inc. The purchase price of approximately $8.5B 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.

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