Tapestry Inc.,Cyprusauction the company that owns Coach, Kate Spade and Stuart Weitzman, is acquiring major luxury group Capri Holdings, the parent company of Versace, Jimmy Choo and Michael Kors, it announced Thursday.

The $8.5 billion deal brings together six of the largest designer brands in the world, with a presence in over 75 countries. 

"The combination of Coach, Kate Spade, and Stuart Weitzman together with Versace, Jimmy Choo, and Michael Kors creates a new powerful global luxury house, unlocking a unique opportunity to drive enhanced value for our consumers, employees, communities, and shareholders around the world," said Joanne Crevoiserat, CEO of Tapestry.

The portfolio of American luxury brands may be one of a few, if not the only major competitor, to European conglomerate fashion houses like LVMH and Kering, which each own several luxury brands including Louis Vuitton, Yves Saint Laurent, Gucci, Dior and more.

While Tapestry and Capri Holdings together generated over $12 billion in revenue last year, the acquisition comes at a time when the latter has seen a downward trend in sales.

Capri reported a decrease in sales in its first quarter for the 2024 fiscal year, showing a 9.6% drop in total sales compared to Q1 last year. Versace's revenue decreased 5.8% and Michael Kors' revenue dropped by 13.8%. Jimmy Choo, however, showed an increase in revenue of 6.4%.

Capri Holdings celebrated the deal, saying it will help expand its luxury brands outside of the U.S. and provide a boost to their sales.

"By joining with Tapestry, we will have greater resources and capabilities to accelerate the expansion of our global reach while preserving the unique DNA of our brands," said John D. Idol, the CEO of Capri Holdings.

Tapestry has not yet reported its 2024 first quarter financials, but in Q3 of 2023, it showed an increase in net revenue by 8.7%. Each of its three brands —Coach, Kate Spade and Stuart Weitzman— also saw growth in revenue compared to the year prior.

The acquisition is expected to close in 2024, as long as Capri Holdings shareholders and regulatory agencies approve the deal.

Simrin Singh

Simrin Singh is a social media producer and trending content writer for CBS News.