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‘We have concerns around the acquisition of Capri Holdings during a period of slowing growth for all three of its brands,” wrote Edward Jones analysts. “Also, we are concerned that the acquisition histories of both companies have been poor, and several brands are currently in different stages of turnaround.”
Tapestry announced the acquisition of Capri Holdings (NYSE:CPRI) for $8.5 billion. Alongside this, they’ve raised their yearly dividend by 17% to $1.40 per share. Capri Holdings owns renowned brands like Michael Kors, Versace, and Jimmy Choo. To support this venture, Tapestry has secured bridge financing of $8B.
Acquiring Capri Holdings could likely disrupt the business. Firstly, both companies have a history of struggling with acquisitions and finances. Secondly, some brands under both companies are in turnaround phases. Lastly, the retail industry generally doesn’t excel at acquisitions.
“Tapestry management was having some success turning around the brands, but there is still work to do,” wrote the analysts.
Shares of TPR are up 2.71% in mid-day trading Friday.
