Luxury good giant, Capri Holding, has announced that it is stepping away from a long wrangled over merger deal with rival, Tapestry.
The two companies have announced that they are scuppering the deal by “mutual” agreement. They state that they realised they were unlikely to get regulatory agreement from the US authorities in time to hit the deal “outside date” of 10th February, 2025.
The $8.5 billion acquisition was originally announced in August 2023. The Federal Trade Commission announced in April that it would sue to block the deal. It says that “the tie-up would disadvantage consumers and reduce benefits for the companies’ employees,” says CNBC. In October, a federal judge granted a preliminary injunction to block the proposed merger, siding with the FTC.
Tapestry is the owner of Coach, Kate Spade and Stuart Weitzman. Capri Holdings is the parent company of founder-led brands Versace, Jimmy Choo and Michael Kors and has a global workforce of 15,000. It operates 1,200 luxury retail locations globally but has seen a drop off in sales in the last 18 months.
This, and the decision to terminate the merger, may ring alarm bells but the company accompanied the announcement with an invite to a conference call in which the company promised to reveal its “strategic initiatives to return to growth”.
The company’s CEO, John D. Idol, said in a statement: “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.”
Tapestry’s CEO, Joanne Crevoiserat, was more bullish and commented that her company will grow despite this decision. “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,” she said in a statement.
CNBC adds that Tapestry will reimburse Capri around $45 million as pre-agreed if the deal failed to earn regulatory approval.
