NEW YORK – Fashion company Tapestry on Thursday said it's terminating its proposed merger with Capri because the two luxury groups don't expect to overcome an antitrust challenge within an acceptable time frame.
The companies agreed to a $8.5 billion deal in August 2023 that would have united Capri, the maker of Versace, Jimmy Choo and Michael Kors shoes, handbags and accessories, with Tapestry, which produces the same products under the Coach, Kate Spade New York, and Stuart Weitzman brands.
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But the deal has faced numerous obstacles.
In April, the Federal Trade Commission sued to block Tapestry's acquisition of Capri, saying the deal would eliminate direct competition between the companies’ brands in the so-called affordable luxury handbag arena.
The FTC also alleged that the deal threatened to eliminate the incentive for the two companies to vie for employees and could depress wages and workplace benefits. The combined Tapestry and Capri would have employed roughly 33,000 people worldwide, the agency said.
Last month, a U.S. District judge halted the merger, saying it would reduce competition and hurt consumers.
Tapestry and Capri filed a notice to jointly appeal the decision, but Tapestry said Thursday the outcome of the legal process is “uncertain and unlikely to be resolved by the February 10, 2025 outside date.”
Capri shares slid 4.6% in premarket trading.
New York-based Tapestry called its first quarter “successful” and said it would accelerate growth in its organic business. The company said its board authorized a stock buyback plan of up to $2 billion.
Tapestry shares added 6.3%.