TLDR:
- Federal judge blocks $8.5B Tapestry-Capri merger on antitrust grounds
- Capri stock plunges 47%, while Tapestry shares rise 14%
- Judge rules merger would reduce competition in accessible luxury handbags
- Both companies plan to appeal the decision
- FTC claims victory for consumer choice and affordable prices
Capri Holdings saw its stock price drop dramatically by 47% on Friday after a U.S. federal judge blocked its planned $8.5 billion merger with Tapestry Inc.
The ruling, which came late Thursday, sent shockwaves through the market, with Tapestry’s stock moving in the opposite direction, gaining 14% in early trading.

U.S. District Judge Jennifer Rochon granted the Federal Trade Commission’s request for a preliminary injunction, effectively halting the combination of the two fashion powerhouses. The ruling centered on concerns about reduced competition in the accessible luxury handbag market.
The proposed merger, announced last year, would have brought together six well-known fashion brands under one corporate umbrella. Tapestry’s Coach, Stuart Weitzman, and Kate Spade would have joined forces with Capri’s Versace, Jimmy Choo, and Michael Kors brands.
The court’s 169-page ruling emphasized that “antitrust has come into fashion,” suggesting that the merger would substantially reduce competition in the accessible luxury handbag sector. This market segment represents a key battleground for both companies.
Both Tapestry and Capri have announced their intention to appeal the decision. Tapestry released a statement defending the industry’s competitive nature, saying, “Tapestry and Capri operate in an industry that is intensely competitive and dynamic, constantly expanding, and highly fragmented among both established players and new entrants.”
The FTC, which initiated the legal challenge in April, argued that the merger would harm consumers through reduced choice and potentially higher prices. The agency also expressed concerns about the impact on workers, suggesting the deal could affect wages and workplace conditions.
Henry Liu, director of the FTC’s Bureau of Competition, celebrated the ruling as a victory for consumers, emphasizing the importance of maintaining competition in the affordable luxury handbag market. The products, he noted, are essential items that millions of Americans use daily.
The financial impact of the ruling was immediate and substantial. Capri’s stock fell to $22.00, representing a decline of $19.59 per share. The drop erased billions in market value and highlighted investors’ concerns about the company’s standalone prospects.
For perspective, the combined companies generated more than $12 billion in annual sales during fiscal 2023. However, this figure remains notably smaller than European luxury giants like LVMH, which reported sales of 86.2 billion euros ($93.3 billion) last year.
Tapestry had previously argued that the merger was necessary to compete effectively against dominant European luxury brands like Gucci. The company maintained that the deal would benefit consumers and enhance competition in the global luxury market.
The ruling allows the FTC to proceed with its administrative case against the merger, though all parties will have additional opportunities to present their arguments before the commission.
Year-to-date performance shows contrasting fortunes for the two companies. Tapestry shares have gained 34%, while Capri’s stock has declined by 55%, including Friday’s sharp drop.
The preliminary injunction will remain in effect while the FTC continues its proceedings, creating uncertainty about the deal’s ultimate fate and the future strategic options for both companies.
Trading activity remained heavy throughout Friday morning as investors and analysts assessed the implications of the court’s decision and the companies’ planned appeals.
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