The American luxury brand industry was shaken on October 24 as the U.S. District Court for the Southern District of New York halted Tapestry, Inc.’s ambitious $8.5 billion acquisition of Capri Holdings Limited.
Tapestry’s acquisition plan aimed to unify brands like Coach, Kate Spade New York, Versace, Jimmy Choo, and Michael Kors under a single luxury empire, allowing Tapestry to compete on a larger scale with European rivals.
However, the Federal Trade Commission (FTC) argued that Tapestry and Capri are direct competitors in the U.S. market. The FTC claimed that the acquisition would “limit market competition and raise the risk of price increases.” During an eight-day trial in September, the FTC consistently sounded the alarm on these risks, which the court ultimately supported with its ruling.
In response, Tapestry quickly issued a statement, calling the FTC’s preliminary injunction “disappointing and, we believe, incorrect on the law and the facts.” The company emphasized the highly competitive and dynamic nature of the fashion industry, asserting that the acquisition would benefit consumers. In line with the merger agreement, Tapestry stated it would promptly appeal the court’s decision.
The ruling has had a significant market impact, sending Tapestry’s shares up by approximately 13%, while Capri Holdings saw a 46% drop. With the acquisition’s future now uncertain, Capri Holdings may seek alternative buyers, leaving its path forward unpredictable.