Granting the Federal Trade Commission's request for a preliminary injunction, the U.S. District Court for the Southern District of New York has stopped Tapestry's (TPR, Financials) intended $8.5 billion purchase of Capri Holdings Limited (CPRI, Financials). The decision stops the merger meant to unite Capri's Michael Kors brand with Tapestry's businesses, including Coach and Kate Spade.

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Capri and Tapestry responded with intentions to submit a combined appeal for the Second Circuit with the U.S. Court of Appeals. Declared disappointed, Tapestry said she intends to appeal for both legal and factual reasons and disagrees with the court's ruling.

Arguing that the three main companies would lower competition in the accessible luxury market by integrating, the FTC had launched a lawsuit in April 2024 to stop the merging. The government expressed worries that, where both businesses compete, the combination would result in higher pricing and less innovation in product categories like handbags, clothes, and accessories.

Originally intending to improve its competitive position in worldwide markets, Tapestry first revealed the purchase in August 2023 With the appeal procedure anticipated to take time, the court's decision casts doubt on the deal's future however.

This article first appeared on GuruFocus.