Kudrow panelists Liz Peek and Caroline Downey react to the FTC’s lawsuit seeking to block the $8.5 billion Tapestry-Capri merger.
A federal judge on Thursday blocked the disputed merger between Tapestry and Capri, saying the luxury handbag and accessories maker would stifle competition.
The proposed $8.5 billion merger between Tapestry and Capri was first proposed in August 2023, but faced scrutiny from the Federal Trade Commission (FTC), which filed a lawsuit earlier this year seeking to block the deal.
The companies saw the partnership as a way to become more competitive with European rivals by combining Tapestry’s six brands: Coach, Kate Spade and Stuart Weitzman. and Capri’s Versace, Jimmy Choo, and Michael Kors all under one organization.
U.S. District Judge Jennifer Rochon rejected the companies’ defenses to the deal, including arguments that handbags are non-essential goods and that consumers can influence prices by not buying them if they are too expensive. did. Rochon said that argument “ignores the importance of handbags to many women, not just for expressing themselves through fashion, but also as an aid in their daily lives.”
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Tapestry’s Coach is among the luxury brands that will be combined under one entity under a proposed merger that was blocked by a federal court. (Photographer: Michael Nagle/Bloomberg via Getty Images / Getty Images)
Tapestry argued that the judge’s ruling effectively blocks the merger by requiring an additional lengthy review by the FTC that extends beyond the Feb. 10 merger closing date.
Rochon said the companies are free to defend the deal in FTC proceedings and are not required to abandon the deal if it is not completed by that date.
Capri’s Versace is one of the brands that will be combined under one legal entity if the merger with Tapestry is finalized. (Photo by Scott Olson/Getty Images/Getty Images)
Henry Liu, director of the FTC’s Bureau of Competition, said the decision is “a victory not only for the FTC but also for consumers across the country who seek access to affordable, high-quality handbags.”
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Ticker Security Last Change Change % TPR TAPESTRY INC. 50.51 +6.04 +13.58% CPRI CAPRI HOLDINGS LTD. 21.25 -20.34 -48.91%
Tapestry said in a statement: “We continue to believe that this transaction is pro-competitive and pro-consumer as we face competitive pressures from both lower- and higher-priced products.” He said he disagreed with the decision and plans to appeal.
Capri said in a press release that it and Tapestry intend to jointly appeal the decision to the U.S. Court of Appeals for the Second Circuit.
Capri is also the parent company of Michael Kors. (Photo by Scott Olson/Getty Images/Getty Images)
Shares of both companies moved dramatically in opposite directions on Friday following the court ruling.
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Capri’s stock price fell more than 48%, while Tapestry’s stock price rose more than 13%.
Reuters contributed to this report.
