Capri Holdings (CPRI, Financial) and Tapestry (TPR) have mutually agreed to terminate their $8.5 billion merger agreement. The companies stated that ending the merger is in their best interests due to uncertainty in legal proceedings that are unlikely to be resolved by February 2025.
Initially, Tapestry had planned to buy Capri for $57.00 per share in cash. However, a federal judge blocked the deal, citing competitive concerns raised by the Federal Trade Commission (FTC). In April, the FTC filed a lawsuit to prevent the merger, arguing that it would stifle competition among brands like Coach, Kate Spade, and Michael Kors, especially in the affordable luxury market.
The companies countered the FTC's market definition, emphasizing the competitive landscape with numerous handbag retailers. The transaction's cancellation incurs no penalty, but Tapestry will reimburse Capri approximately $45 million for deal-related expenses.
Tapestry also announced a $2 billion share repurchase authorization, including an accelerated stock buyback plan. It expects to maintain an annual dividend of $1.40 per share in fiscal 2025 and has no immediate acquisition plans. Furthermore, Tapestry plans to redeem priority notes related to planned sales at 101% of the principal and accrued interest, totaling $6.1 billion.
