Tapestry, the company behind Coach, has decided to cancel its $8.5 billion plan to buy Capri, the owner of Michael Kors, Reuters reports.
This comes after U.S. regulators blocked the deal, saying it would reduce competition and let one giant company unfairly raise handbag prices.
The merger would have combined six big brands: Coach, Kate Spade, and Stuart Weitzman from Tapestry, plus Versace, Jimmy Choo, and Michael Kors from Capri.
However, the Federal Trade Commission (FTC) argued that it would harm competition, and a U.S. judge blocked the deal last month.
After facing legal challenges and realizing the issue wouldn’t be resolved by the February 2024 deadline, the two companies agreed to walk away from the deal.
Capri’s stock dropped nearly 6% after the announcement, while Tapestry’s stock rose 6%. Tapestry also shared plans to buy back $2 billion worth of its shares.
Tapestry CEO Joanne Crevoiserat said the company is focusing on other growth strategies and isn’t planning any big acquisitions soon. Tapestry will also cover Capri’s $45 million expenses related to the deal.
The blocked merger highlights how tough competition laws can prevent companies from growing too big in ways that might hurt consumers.
While Tapestry has raised its profit expectations for 2025, Capri has been struggling with declining sales since the merger talks began.
Credit : Reuters