Capri Holdings Ltd and Tapestry Inc. have abandoned their $8.5 billion merger plan after a court order, influenced by FTC objections, blocked the deal over competition concerns in the 'accessible luxury' handbag market. The decision led to a rise in Tapestry's stock and a partial recovery for Capri's shares. Capri, facing financial challenges, plans to focus on revitalizing its key brands, including Michael Kors, Versace, and Jimmy Choo, through strategic pricing, marketing, and store renovations.
Tapestry, Inc. and Capri Holdings Limited have mutually agreed to terminate their $8.5 billion merger due to legal uncertainties and a blocked acquisition ruling. Tapestry will redeem $6.1 billion in senior notes and reimburse Capri $45 million for transaction expenses. The company also announced a $2 billion share repurchase program and plans to maintain its annual dividend. Capri Holdings will focus on growth strategies, including reducing the Michael Kors store fleet. Tapestry's shares rose 8.25% premarket, while Capri's fell 5.60%.
Tapestry, the parent company of luxury designer brands like Coach and Kate Spade, reported an earnings miss in its fourth quarter and provided a weakened forecast. This comes after Tapestry announced its acquisition of rival Capri Holdings in an $8.5 billion deal. The company's shares remained relatively unchanged, and there are questions about whether they overpaid for the acquisition. Tapestry aims to target Gen Z and millennial consumers and has acquired 6.5 million new customers, half of which are from these demographics.
Coach owner Tapestry is in talks to acquire Capri Holdings, the parent company of fashion brands Michael Kors, Jimmy Choo, and Versace. This potential deal would create a major fashion tie-up and allow the new company to better compete with European fashion giants.
