The Federal Trade Commission (FTC) is reportedly gearing up to file a lawsuit in an attempt to prevent the proposed $8.5 billion acquisition of Capri Holdings by Tapestry Inc. This development was first reported by the New York Times Dealbook.
The potential legal action by the FTC comes as a significant hurdle for the deal, which was announced in July 2021. Capri Holdings, the parent company of luxury fashion brands such as Versace, Jimmy Choo, and Michael Kors, had agreed to be acquired by Tapestry, the owner of Coach and Kate Spade.
If the FTC moves forward with the lawsuit, it could delay or even derail the acquisition, as regulatory approval is a crucial step in completing such transactions. The FTC's concerns likely revolve around potential antitrust issues and the impact of the merger on competition within the luxury fashion industry.
Capri Holdings and Tapestry had hoped that combining their portfolios of high-end fashion brands would create a stronger competitor in the global luxury market. However, regulatory scrutiny is common in large mergers and acquisitions, especially when they involve companies with significant market share.
Both Capri Holdings and Tapestry have yet to publicly comment on the reported FTC lawsuit. It remains to be seen how the companies will respond to the regulatory challenge and whether they will seek to address the FTC's concerns to salvage the deal.
Investors and industry analysts will be closely monitoring the situation as it unfolds, as the outcome of the FTC's legal action could have far-reaching implications for the future of both Capri Holdings and Tapestry Inc., as well as the broader luxury fashion sector.
