Tapestry, the American fashion giant behind luxury brands such as Coach and Kate Spade, has agreed to buy Capri the owners of designer Versace in a $8.5bn (£6.6bn) deal.
The merger will form a larger fashion conglomerate which will rival the likes of LVMH, the multibillion pound business behind designers such as Louis Vuitton and Dior.
As part of the deal Capri Holdings shareholders will receive $57 (£44) per share in cash.
The company’s share price nose dived over 15 per cent on Thursday evening following the announcement, while Capir’s rocketed 55.83 per cent as Wall Street gave a mixed reaction to the news.
The Versace owner showed signs of struggling in the last quarter, with revenues down 9.6 per cent to $1.23bn (£97bn).
Tapestry has performed better in recent months, with the group acquiring over 1.2 million new customers in North America alone,half of which were Gen Z and Millennial consumers.
In the third quarter, its net sales totaled $1.51bn (£1.19bn) , up five per cent year on year.
“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,” Joanne Crevoiserat, chief executive officer of Tapestry, Inc.