Coach owner agrees $8.5bn deal to buy Versace parent

The owner of Versace and Michael Kors, Capri Holdings, is being bought by the luxury goods group Tapestry in a deal worth $8.5bn (£6.7bn).

The takeover brings together Tapestry's brands, which include the likes of Coach and Kate Spade, with Capri's labels, such as Jimmy Choo.

Tapestry's boss Joanne Crevoiserat said the deal "creates a new powerful global luxury house".

Analysts said it would build a rival to compete with European fashion giants.

"It's creating a major American fashion conglomerate especially in the premium fashion space," said Louise Deglise-Favre, apparel analyst at the analytics company GlobalData, told the BBC.

"It's not as big as the likes of European giants such as LVMH and Kering, but even so it's definitely giving its brands more of a leg to stand on," she added.

While Versace has become a symbol of Italian luxury around the world, brands such as Kate Spade and Michael Kors are seen as more affordable luxury for some consumers, with smaller accessories typically costing from about £100.

Ms Deglise-Favre said the merger will strengthen Tapestry's position within this market, by combining brands with offerings at a similar price point, like Coach, which has previously put out collaborations aimed at younger shoppers with pop stars like Selena Gomez.

But she warned that Tapestry is also inheriting Michael Kors, which has suffered from years of lacklustre performance.

"It will have a definite challenge with that," she said.

However, Tapestry does have past experience of turning around struggling brands, including Kate Spade, which it took over in 2017.

The deal comes at a time when inflation - the rate at which prices are rising - has been elevated in the US as well as Europe, squeezing consumer spending.

It presents yet another challenge for firms like Tapestry, with aspirational shoppers being particularly hit in recent months, Ms Deglise-Favre said, while firms have to cope with higher interest rates, wages and supply chain issues.

It's expected that the deal will close in 2024.

Ms Crevoiserat said that the move would help the group reach more countries around the world.

It is also estimated to generate savings of more than $200m within three years of closing, the companies said.

It marks the latest deal in the luxury fashion space, with Gucci owner and French multinational Kering announcing it was buying a 30% stake in Italian fashion label Valentino in July.