(Reuters) – Tapestry, parent company of Coach, is to acquire Capri Holdings, owner of the Michael Kors and Versace brands, in an $8.5 billion (7.7 billion euros) deal, it said. the two American groups on Thursday, thus creating a large fashion house better able to compete with European luxury competitors.

Tapestry is offering $57 per Capri share, representing a nearly 65% ​​premium to its target’s closing price on Wednesday. In trading before the opening of the New York Stock Exchange, Capri climbed 59% while Tapestry fell 4.2%. American players in the luxury industry have always been left behind by their European competitors, such as the world leader in the sector LVMH, which counts among its 75 brands Louis Vuitton, Dior and Tiffany. The deal could give both companies new momentum as the U.S. retail sector faces weaker domestic demand due to inflation and an uneven recovery in the Chinese market.

“Weakening demand has put pressure on Tapestry and Capri, who are now looking to international markets to support their growth. There is more security in embarking on bold international ventures together,” said Neil Saunders, CEO of GlobalData.

Tapestry – then known as Coach Inc – bought handbag brand Kate Spade in 2017 for $2.4 billion.

In the same year, Capri, formerly known as Michael Kors, snapped up British shoe brand Jimmy Choo for $1.2 billion. A year later, it was Versace’s turn to fall into his hands for $2.2 billion.

The acquisition of Capri could initiate the resumption of operations in American luxury, while the major European groups continue to expand their portfolio by seizing high-end brands.

Last month, Kering said it was taking a 30% stake in Italian brand Valentino. LVMH completed the acquisition of jeweler Tiffany for $15.8 billion in early 2021.

(Chandni Shah and Aishwarya Venugopal in Bangalore, Laetitia Volga, editing by Kate Entringer)

Copyright © 2023 Thomson Reuters