The luxury fashion brand merger between Capri and Tapestry is officially off, as the two companies announced Thursday that they will abandon the merger because they were unlikely to gain regulatory approval.
The proposed $8.5 billion merger was first announced in August 2023 but has faced scrutiny from the Federal Trade Commission (FTC), which sued to block the deal earlier this year over concerns it would undermine competition in the luxury handbag and accessories space. In late October, a federal judge blocked the merger citing competition issues raised by the proposed merger.
U.S. District Judge Jennifer Rochon said that the companies' defense of the deal hinged on an argument that handbags are nonessential goods that are price-sensitive to consumer preferences, which she said "ignores that handbags are important to many women, not only to express themselves through fashion but to aid in their daily lives."
Had the merger proceeded, it would've united Tapestry's Coach, Kate Spade and Stuart Weitzman brands with Capri's Versace, Jimmy Choo and Michael Kors. The leaders of the two companies outlined their paths forward following the abandonment of the merger.
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Capri CEO John D. Idol said in a statement on Thursday, "With the termination of the merger agreement, we are now focusing on the future of Capri and our three iconic luxury houses."
"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 omni-channel consumer experience. While our strategies are tailored uniquely for each brand, our overarching goals are similar," Idol added.
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Tapestry CEO Joanne Crevoiserat said, "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."
"Tapestry remains in a position of strength, with distinctive brands, an agile platform, passionate teams, and robust cash flow. 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," Crevoiserat added.
Capri shares have lost roughly half of their value since the judge blocked the merger last month.
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Tapestry stock was up more than 13% and was trading at the highest level in a decade following Thursday's announcement of a share buyback alongside the merger's termination.
