NEW YORK, NY – A federal judge in New York has issued a ruling blocking the proposed merger between luxury fashion houses Tapestry and Capri, which would have brought together brands like Coach, Kate Spade, Versace, Jimmy Choo, and Michael Kors under one company. The decision comes after a brief trial last month, where Judge Jennifer Rochon granted the Federal Trade Commission’s motion for a preliminary injunction, putting a halt to the $8.5 billion deal that was announced over a year ago.
Following the judge’s order, Tapestry’s stock saw a significant increase of 14%, while Capri’s stock took a nosedive with a more than 52% drop. Representatives for Tapestry have yet to comment on the ruling, and the specific reasoning behind Judge Rochon’s decision remains sealed from the public, pending a detailed opinion.
The FTC had sued to block the merger in April, arguing that combining the two companies would harm consumers by reducing competition in the affordable handbag market and potentially impacting salaries and benefits for employees. On the other hand, Tapestry claimed that the merger would benefit consumers by allowing the company to stay ahead of fashion trends, offer better products, and reach a wider customer base.
The clash between these two industry giants highlights the complexities and challenges of corporate mergers in the retail sector. The legal battle over the Tapestry-Capri deal underscores the scrutiny that large-scale acquisitions face from regulatory agencies like the Federal Trade Commission, which aim to ensure fair competition and protect consumer interests. As both companies navigate the aftermath of this ruling, the future of the luxury fashion landscape remains uncertain. Stay tuned for further developments on this story as it unfolds.