A and a abandoned their $8.5 billion merger plan following a proposal from US fashion companies due to objections from antitrust regulators.
Tapestry, which owns the Coach and Kate Spade brands, and Capri, whose largest brand is Michael Kors, said they mutually decided to end the deal as it was in the best interests of both companies.
The judge’s ruling late last month was a victory for Federal Trade Commission (FTC) Chairwoman Lina Khan, who opposed the deal on the grounds that it would harm competition in the market for “affordable” luxury handbags. ”.
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Tapestry shares rose more than 6% before the market opened in New York. Capri shares fell nearly 6% in premarket trading.
Tapestry and Capri have been competing for nearly a decade to dominate the U.S. handbag market.
The collapse of the business worsens Capri’s problems, which earlier this month reported weak financial results, hurt by falling revenue at Michael Kors. Sales of Versace, another key brand, also plummeted.
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Capri remains confident in the company’s long-term future and will focus on its three core luxury brands, which also include Jimmy Choo, said John Idol, president and CEO of Capri. He added that Capri has a strong network of luxury outlets globally, a “robust digital platform” and an extensive wholesale network.
Analysts said they believe Capri may have to sell some of its brands following the failed merger.
Tapestry is doing better. It recently raised its forecasts for the year due to better-than-expected revenue at Coach. Tapestry shares soared when the deal was blocked in October as investors worried about the potential burden of the Capri acquisition.
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