A proposed $8.5 billion merger that would have would have brought Coach, Kate Spade, and Michael Kors, as well as Stuart Weitzman, Versace, and Jimmy Choo, under the same roof, is no more. Coach-owner Tapestry announced on Thursday that it has reached an agreement with Michael Kors’ parent company Capri Holdings to terminate the merger agreement between the parties. In a statement, Tapestry said that it and Capri Holdings “mutually agreed that terminating the merger agreement at this time is in the best interest of both companies, as the outcome of the legal process is uncertain and unlikely to be resolved by the February 10, 2025 outside date.”
Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc., said, “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. Tapestry remains in a position of strength, with distinctive brands, an agile platform, passionate teams, and robust cash flow. We have significant runway ahead and are pleased to announce today an additional shareholder return program, as we believe there is no better investment at this time than our own stock.”
Tapestry’s Chief Financial Officer and Chief Operating Officer, Scott Roe, said, “Tapestry’s steadfast commitment to deliver meaningful shareholder value is unchanged. Our strong and consistent cash flow underpins our foundational commitments to invest in our brands and business as well as fund our dividend program.”
The New York-headquartered company stated that it “does not expect any acquisitions in the near-term, and before moving forward with any acquisitions, [it] will ensure Coach remains strong and Kate Spade has returned to sustainable topline growth.”
The breakdown of the deal follows from legal proceedings waged by the Federal Trade Commission (“FTC”) earlier this year, with the regulator issuing an administrative complaint and authorizing a lawsuit in New York federal court in April in furtherance of an effort to block the proposed deal. The FTC argued that the proposed merger, which was first announced in August 2023, “seeks to combine three close competitors – Tapestry’s Coach and Kate Spade brands and Capri’s Michael Kors brand.” If allowed, the FTC alleged that the merger “would eliminate direct head-to-head competition between Tapestry’s and Capri’s brands” and “give Tapestry a dominant share of the ‘accessible luxury’ handbag market, a term coined by Tapestry to describe quality leather and craftsmanship handbags at an affordable price.”
In a recent win for the FTC, Judge Jennifer Rochon of the U.S. District Court for the Southern District of New York preliminarily halted the merger on the basis that a deal to combine the Coach, Michael Kors, and Kate Spade brands, among others, would reduce competition and hurt consumers.
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