Tapestry, Inc. (TPR, Financial) has announced the termination of its previously planned merger with Capri Holdings Limited. The decision, effective immediately as of November 13, 2024, was formalized through a Termination Agreement. As part of this agreement, Tapestry will reimburse Capri Holdings $45,088,675 in expenses by November 14, 2024. Both parties have agreed to release each other from any claims related to the merger.
Concurrently, Tapestry has terminated its Term Loan Agreement with Bank of America N.A., which was initially established to support the merger. This strategic pivot allows Tapestry to focus on other financial maneuvers, including a significant share repurchase program.
The company has announced a new authorization to repurchase up to $2.0 billion of its outstanding common stock. This initiative is in addition to the $800 million remaining from a previous repurchase program authorized in May 2022. Tapestry plans to execute this buyback through various methods, including open market purchases and accelerated share repurchase programs, funded by cash on hand and potential new debt issuances.
In light of the merger termination, Tapestry is also set to redeem all outstanding notes, including both EUR and USD denominated notes, with a redemption date around November 25, 2024. The redemption will be funded with cash on hand, and the company expects to recognize approximately $57.1 million in unamortized cash flow hedge losses and $61.1 million in redemption premiums in its second fiscal quarter of 2024.
This strategic shift underscores Tapestry's commitment to enhancing shareholder value through direct capital returns, while recalibrating its financial strategies in the wake of the merger termination.
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