What: Capri and Tapestry have mutually agreed to abandon their USD 8.5 billion merger after facing regulatory hurdles, including a successful lawsuit by the Federal Trade Commission (FTC) to block the deal.

Why it is important: The cancellation of this merger highlights the increasing scrutiny from regulators on large corporate deals, especially in the luxury sector. It also impacts both companies' strategic growth plans, with Tapestry now focusing on organic growth and Capri seeking to revitalise its brands.

Capri Holdings and Tapestry, Inc. have called off their proposed USD 8.5 billion merger after the FTC successfully sued to block the deal, citing concerns about reduced competition and potential disadvantages for consumers and employees. The merger, announced in August 2023, would have combined six major luxury brands under one company, including Coach, Michael Kors, Versace, and Kate Spade. Despite initially planning to appeal the FTC’s ruling, both companies agreed that terminating the merger was in their best interests due to the unlikelihood of receiving regulatory approval before the deal's expiration in February 2025. Tapestry now plans to use its freed-up capital for a USD 2 billion share repurchase programme, while Capri will focus on revitalising its brands, particularly Michael Kors, which has seen declining sales. There is no break fee associated with the termination, but Tapestry will reimburse Capri approximately USD 45 million for expenses related to the failed transaction.

Capri and Tapestry cancel merger amid regulatory challenges