Companies

Tapestry and Capri Holdings call off merger plans

Nov 15, 2024 United States

The two companies have agreed to call off their merger plans after a US court blocked the deal last October, ending their efforts to create a US luxury giant capable of competing with major European players

Capri Holdings and Tapestry have mutually agreed to terminate the merger agreement at this time in the best interests of both companies, as the outcome of the legal proceedings is uncertain and unlikely to be resolved by the 10^th of February 2025, the deadline set for the deal.

Tapestry’s 8.5 billion US acquisition of Capri Holdings would have brought six brands underneath a single umbrella: the former’s Coach, Kate Spade and Stuart Weitzman and the latter’s Versace, Jimmy Choo and Michael Kors.

However, the US District Court for the Southern District of New York blocked the proposed merger in October, handing the victory to the US Federal Trade Commission (FCT), which argued that the deal would have eliminated head-to-head competition between the two handbag makers and created a giant company with the power to unfairly raise prices for consumers.

“We have always had multiple paths to growth and our decision today clarifies the forward strategy. Building on our successful first quarter, we will move with speed and boldness to accelerate growth for our organic business”, said Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc. “We have significant runway ahead and are pleased to announce today an additional shareholder return program, as we believe there is no better investment at this time than our own stock”, she announced.

In the statement, Tapestry added that it does not expect to make any acquisitions in the near term, and before moving forward with any acquisitions, it will ensure that Coach remains strong and that Kate Spade has returned to sustainable top-line growth. On the contrary, Capri Holdings, which recently reported another disappointing quarterly performance, took the opportunity to outline several strategies that will allow its brands to return to growth.

“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. Across Versace, Jimmy Choo and Michael Kors, we are focused on brand desirability through exciting communication, compelling product and omnichannel consumer experience. While our strategies are tailored uniquely for each brand, our overarching goals are similar”, explained John D. Idol, the company’s Chairman and Chief Executive Officer.

The owner of Versace, Michael Kors and Jimmy Choo plans to expand its customer base through innovative marketing strategies and increased investment and to create high-quality, value-driven fashion products, optimising pricing, and leveraging digital channels to drive e-commerce growth. In addition, the company will streamline its retail footprint and renovate stores to enhance the shopping experience.

Image Credits: thefashionlaw.com

United States Acquisitions Capri Legal Luxury Tapestry