Capri Holdings Limited shareholders adopted a resolution authorizing the company’s sale to Tapestry Inc. at a special meeting, according to company filings Wednesday.
The approval was the latest step in a merger that will allow Tapestry to acquire rival fashion house Capri, in a deal valued at $8.5 billion.
When the dust settles, the merger of Tapestry-owned brands Coach, Kate Spade and Stuart Weitzman with Capri-owned brands Versace, Jimmy Choo and Michael Kors will make create the fourth largest luxury house in the world, with a combined share of around 5.1% of the global luxury goods market, according to Wells Fargo analysts.
The deal is expected to close next year, and Tapestry previously announced it had secured $8 billion in bridge loans and the purchase would be funded through senior notes, term loans, and excess Tapestry money that would pay some of Capri’s debt.
The combined company will allow Tapestry to become “the number one player in the accessible luxury handbag market in the US by a wide margin,” analysts for Wells Fargo previously told sister publication Retail Dive.
But some analysts expressed concern over the Michael Kors brand, which represents a bulk of Capri’s revenue. At the time the deal was announced, Neil Saunders of GlobalData said the brand was declining and may represent a “big problem” for Tapestry to resolve.
“While well known, [it] does not have a clear position in the marketplace and lacks the prestige of many other luxury labels,” Saunders told Retail Dive in an email.
Michael Kors saw its revenue fall 14% in Capri’s most recent earnings announced in August. Capri’s total revenue for the quarter declined 9.3% compared to the prior year to $1.23 billion.
The combined brands of Capri and Tapestry generated more than $12 billion in sales last year, according to a Capri press release in August.
Tapestry, which is set to report its first quarter earnings on Nov. 9, finished its most recent fiscal year with $6.66 billion in net sales.
