The U.S. Federal Trade Commission (FTC) has filed a lawsuit to halt Tapestry Inc.'s proposed $8.5 billion acquisition of Capri Holdings Limited. This merger would bring together three closely competing brands - Tapestry's Coach and Kate Spade and Capri's Michael Kors. The FTC asserts that if this deal were to proceed, the direct rivalry between Tapestry's brands and Capri's would be eliminated. Moreover, it would provide Tapestry with a commanding position within the affordable luxury handbag sector, as stated by the FTC on Monday.
The FTC has raised concerns that the proposed deal could remove the incentive for both companies to compete in terms of recruitment, which may negatively impact employee salaries and workplace benefits. If this acquisition were to proceed, the merged entity of Tapestry and Capri would employ approximately 33,000 individuals globally.
At present, Tapestry and Capri compete across various product lines from clothes to eyewear to footwear. Capri has expressed strong disagreement with the FTC's decision in a separate press statement. The company plans to fiercely defend its position in court along with Tapestry and complete the pending acquisition. All other jurisdictions have approved the transaction, with the U.S. FTC being the only regulatory body to withhold approval.
Tapestry has expressed full faith in the advantages and competitive spirit of the deal. The company believes this transaction will yield substantial benefits for its customers, employees, partners, and shareholders in the U.S. and worldwide. Armed with compelling legal arguments in defense of the deal, Tapestry is eager to present its case in court and work rigorously to conclude the transaction within the 2024 calendar year.
Tapestry had announced in August 2023 that it had agreed to acquire Capri Holdings at a total enterprise value of approximately $8.5 billion. The specifics of the deal would see each shareholder of Capri Holdings receiving $57 per share.
