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FTC Sues To Block The Megamerger Of Tapestry And Capri
https://www.whatjobs.com/news/united-kingdom/uk-business-news/ftc-sues-to-block-the-megamerger-of-tapestry-and-capri
By Nithya Bose in Business News, posted April 23, 2024
The Federal Trade Commission has sued to block the $8.5 billion merger between Tapestry, the parent of Coach and Kate Spade, and Capri Holdings.
This lawsuit challenges a transaction that would merge some of the most prominent American luxury fashion brands under one umbrella.
The acquisition aims to create a powerhouse that includes Tapestry's labels—Coach, Kate Spade, and Stuart Weitzman—alongside Capri's portfolio of Versace, Jimmy Choo, and Michael Kors.
"The FTC has chosen to ignore the reality of today’s dynamic and expanding $200 billion global luxury industry”
This deal would enhance the merged entity's competitive stance against major European luxury conglomerates like Burberry and LVMH's Louis Vuitton.
However, the FTC has raised concerns about potential adverse effects on consumers and employees.
The agency said Tapestry and Capri “currently compete on everything from clothing to eyewear to shoes.”
Henry Liu, director of the FTC’s Bureau of Competition, said: “With the goal to become a serial acquirer, Tapestry seeks to acquire Capri to further entrench its stronghold in the fashion industry.
“This deal threatens to deprive consumers of the competition for affordable handbags, while hourly workers stand to lose the benefits of higher wages and more favorable workplace conditions.”
Tapestry said the FTC “fundamentally misunderstands both the marketplace and the way in which consumers shop.”
The company said: “The bottom line is that Tapestry and Capri face competitive pressures from both lower- and higher-priced products.
“In bringing this case, the FTC has chosen to ignore the reality of today’s dynamic and expanding $200 billion global luxury industry.”
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Both companies said they’ll fight for the merger in court and Tapestry said it’ll work “expeditiously to close the transaction in calendar year 2024.”
Tapestry announced the proposed acquisition in August and had already received clearance from European and Japanese regulators.
The deal is now pending approval only from US authorities.
According to Tapestry CEO Joanne Crevoiserat, the merger would expand the company's global reach, pushing annual revenues to over $12 billion and establishing a presence in more than 75 countries.
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