Capri Holdings Limited (CPRI) shares plummeted by nearly 50% after a judge blocked its acquisition by Tapestry, Inc. (TPR). The judge’s decision, which came after an eight-day trial, grants the Federal Trade Commission’s request for a preliminary injunction, arguing that the merger would stifle competition in the U.S. handbag market. Both companies have announced their intention to appeal the ruling.
U.S. stock futures were upbeat this morning, with the Nasdaq gaining ground. However, the market saw significant pre-market losses for several companies, including Capri Holdings after a judge blocked its merger with Tapestry, Coursera due to weak guidance, and The Bancorp following disappointing earnings. Read on for a breakdown of the day’s key pre-market movers.
Deckers Outdoor Corporation (DECK) shares surged in pre-market trading after exceeding earnings expectations in the second quarter. Meanwhile, Capri Holdings (CPRI) plummeted after a judge blocked its proposed merger with Tapestry. Other notable pre-market movers include Safe & Green Holdings, ARB IOT Group, Jeffs’ Brands, and Faraday Future.
Tapestry’s proposed $57 per share acquisition of Capri Holdings has encountered opposition from the Federal Trade Commission (FTC), raising concerns about potential antitrust violations. The FTC argues that the merger would result in Tapestry’s dominance in the “accessible luxury” handbag market and negatively impact employees. However, Tapestry disputes these claims, maintaining that the market is competitive and the deal would not harm consumers or workers. The case is expected to proceed to court, with a judge assigned to oversee the proceedings. The outcome of the trial is uncertain, but analysts believe there is a 60% chance that the deal will be approved. Capri’s stock price currently reflects a 29% likelihood of a legal victory, offering potential investment opportunities with an estimated return of 22% if the merger is successful.
The Federal Trade Commission (FTC) has filed a lawsuit to block the proposed $8.5 billion merger between Tapestry, Inc. and Capri Holdings Limited, citing antitrust concerns. Tapestry owns brands such as Coach and Kate Spade, while Capri owns brands like Michael Kors and Versace. The FTC alleges that the deal would eliminate direct competition between the two companies in the ‘accessible luxury’ handbag market, giving Tapestry an unfair advantage. The regulators also expressed concerns about potential negative consequences for workers in the combined company, including lower wages and reduced workplace benefits.
The Federal Trade Commission (FTC) has filed a lawsuit to block the $8.5 billion acquisition of Capri Holdings by Coach and Kate Spade’s parent company, Tapestry. The deal would have combined six fashion brands under one company, including Tapestry’s Coach, Kate Spade, and Stuart Weitzman, and Capri’s Versace, Jimmy Choo, and Michael Kors. However, the FTC argues that the merger would harm shoppers and employees by reducing competition and raising prices.
