Kudlow panelists Liz Peek and Caroline Downey respond to the FTC’s lawsuit to block the $8.5 billion Tapestry-Capri merger.
A federal judge on Thursday blocked the trial pending merger of Tapestry and Capri on the grounds that makers of luxury bags and accessories would undermine competition.
A proposed $8.5 billion merger between Tapestry and Capri was first proposed in August 2023 but has faced scrutiny Federal Trade Commission (FTC)who sued to block the deal earlier this year.
The companies are looking at the tie-up as a way to better compete with European rivals by combining six brands – Tapestry Coach, Kate Spade and Stuart Weitzman; and Capri’s Versace, Jimmy Choo and Michael Kors – under one entity.
US District Judge Jennifer Rochon rejected the companies’ defense of the deal, including the argument that the bags are non-essential items that consumers can influence their price by not buying them if they are too expensive. Rochon said the argument “ignores the fact that bags are important to many women, not just to express fashion but to help them in their daily lives.”
THE FTC MAY ATTEMPT TO BLOCK OTHER BUSINESS COMBINATIONS
Tapestry’s Coach is among the luxury brands that could be combined under one entity under a proposed merger blocked by a federal court. (Photographer: Michael Nagle/Bloomberg via Getty Images/Getty Images)
Tapestry argued that the judge’s decision effectively blocks the merger by requiring a lengthy additional FTC review that would extend beyond the merger’s Feb. 3 completion date. 10.
Rochon said the companies are free to defend the deal in the FTC process and are not required to abandon the deal if it has not yet closed by that date.
Capri’s Versace is among the brands that could be merged under one entity if the merger with Tapestry eventually goes ahead. (Photo by Scott Olson/Getty Images / Getty Images)
Henry Liu, director of the FTC’s Bureau of Competition, said the decision “is a victory not only for the FTC, but also for consumers across the country who want access to quality bags at affordable prices.”
FTC: SEE HOW MANY MERGER AND BUYERS HAVE BEEN BLOCKED DURING THE BIDEN ADMINISTRATION
| A ticker | Security | Finally | Change | change % |
|---|---|---|---|---|
| TPR | Company TAPESTRY INC. | 50.51 | +6.04 |
+ 13.58% |
| CPRI | CAPRI HOLDINGS LTD. | 21.25 | -20.34 |
-48.91% |
“We face competitive pressure from both low- and high-priced products and continue to believe this transaction is competitive and pro-consumer,” Tapestry said in a statement, noting that it disagrees with the decision and plans to appeal.
Capri said in a press release that he and Tapestry intend to file a joint appeal with the US Court of Appeals for the Second Circuit.
Capri is also the parent company of Michael Kors. (Photo by Scott Olson/Getty Images / Getty Images)
These two companies stock prices moved forward in different directions on Friday in response to the court’s decision.
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Capri’s stock is down more than 48 percent and Tapestry’s is up more than 13 percent.
Reuters contributed to this report.
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