$8.5B Deal In Luxury Industry Falls Through! Tapestry (TPR.US) And Capri (CPRI.US) Agree To Terminate Merger
1min read Capri Holdings (CPRI.US) and Tapestry (TPR.US) have agreed to terminate their $8.5 billion merger, the US fashion luxury group said.
"Capri and Tapestry have agreed that it is in the best interest of both companies to terminate the merger agreement at this time, given the uncertain and unlikely resolution of the legal proceedings," the companies said in a statement.
Tapestry agreed to buy Capri in August for $57.00 per share in cash.
The deal was blocked by a federal judge who said it violated antitrust rules, leading to regulatory hurdles. US District Judge Jennifer L. Robson granted the Federal Trade Commission's preliminary injunction motion to block the deal.
The FTC sued in April to block the deal, saying it would eliminate competition between Coach, Kate Spade and Michael Kors, especially in the "affordable luxury" market.
Tapestry and Capri argued at the time that the commission's definition of the "affordable luxury" market was not relevant and that handbag retailers were competing with hundreds of other handbag manufacturers and new entrants.
No break-up fee will be paid. Tapestry has agreed to reimburse Capri for about $45 million of transaction-related expenses.
Tapestry also announced an additional $2 billion stock buyback authorization, including a planned accelerated stock buyback program. The fashion company also expects to maintain an annual dividend rate of $1.40 per share in fiscal 2025 and does not expect to make any acquisitions in the near term.
The company intends to redeem the senior notes related to the planned sale at 101% of their principal amount and accrued interest, totaling $6.1 billion.