A pedestrian walks past a Michael Kors store on August 10, 2023 in Chicago, Illinois.
Scott Olson | Getty Images
Capri and Tapestry called off their merger on Thursday after the megadeal was blocked by the Federal Trade Commission.
The two U.S.-based luxury houses “mutually agreed” that terminating the merger was in their best interests as they were unlikely to get regulatory approval before the deal was set to expire in February.
“With the termination of the merger agreement, we are now focusing on the future of Capri and our three iconic luxury houses,” Capri CEO Johh Idol said in a statement. “Looking ahead, I remain confident in Capri’s long-term growth potential for numerous reasons.”
The $8.5 billion acquisition, originally announced in August 2023, would have married America’s two largest luxury houses and put six fashion brands under one company: Tapestry’s Coach, Kate Spade and Stuart Weitzman with Capri’s Versace, Jimmy Choo and Michael Kors.
In April, the FTC sued to block the deal, saying the tie-up would disadvantage consumers and reduce benefits for the companies’ employees. Last month, a federal judge ruled in the FTC’s favor and granted its motion for a preliminary injunction to block the proposed merger.
At the time, Tapestry said it would appeal the ruling.
Under the terms of the merger agreement, Tapestry agreed to pay Capri up to $50 million if the transaction failed to earn regulatory approval. Capri, on the other hand, agreed to pay a breakup fee of $240 million if it received a better offer from another suitor or violated other terms of the agreement.
It’s unclear whether either company will owe a fee given the mutual termination.
Capri is slated to have a call with analysts at 11 a.m. ET to discuss the decision and its strategies to return to growth and fix its most important brand, Michael Kors, which has been grappling with a long decline in sales.
“Given our Company’s performance over the past 18 months, we have recently started to implement a number of strategic initiatives to return our luxury houses to growth,” Idol said in a news releae. “Across Versace, Jimmy Choo and Michael Kors, we are focused on brand desirability through exciting communication, compelling product and omni-channel consumer experience. While our strategies are tailored uniquely for each brand, our overarching goals are similar.”
This is breaking news. Please refresh for updates.
