Tapestry’s $8.5 Billion Capri Deal Halted in FTC Win
In This Article:
(Bloomberg) -- A judge blocked the planned $8.5 billion acquisition by Tapestry Inc., maker of Coach and Kate Spade handbags, of rival Capri Holdings Ltd.
Most Read from Bloomberg
US District Judge Jennifer Rochon on Thursday froze the deal after concluding it would be anticompetitive. That gives the US Federal Trade Commission time for its own internal trial over the merger, a process that could take months and may doom the combination.
Capri shares dropped as much as 56% in post-market trading following the judge’s decision
“The merging parties are close competitors, such that the merger would result in the loss of head-to-head competition,” the judge said in her ruling.
The FTC, Tapestry and Capri didn’t immediately respond to requests for comment.
In her opinion, Rochon wrote that “accessible-luxury handbags function similarly to mass-market and true-luxury handbags,” saying that one can carry a wallet, a phone, or a personal item in a Trader Joe’s tote bag just as effectively as in an Hermès Birkin.”
But she said “functionally similar products may be in separate product markets, depending on the facts of the case,” noting that while Chevrolets and Fords “might be interchangeable,” Chevrolets and Lamborghinis are not.
“It may be true that, without knowing its brand, someone may not know with certainty whether a particular handbag is mass market, accessible luxury, or true luxury,” she wrote. “But the evidence presented made clear to the court that brand is a fundamental attribute of a handbag.”
Rochon, a Joe Biden appointee who took the bench in 2022, heard testimony in September for more than a week in Manhattan federal court. The case was closely watched by hedge funds and other investors betting on whether the judge would allow the merger to proceed.
--With assistance from Yiqin Shen, Leah Nylen and Jeannette Neumann.
(Updates with shares in third paragraph.)
Most Read from Bloomberg Businessweek
?2024 Bloomberg L.P.