FTC Eyes Lawsuit to Block the Merger of Two Top Fashion Companies Worth $8.5 Billion

By Thea Felicity

Apr 17, 2024 01:49 PM EDT

People walk past Italian fashion shop Versace on December 4, 2017, in the Vittorio Emanuele II Gallery in Milan.
(Photo : Photo by MIGUEL MEDINA/AFP via Getty Images)

The Federal Trade Commission (FTC) is reportedly gearing up to oppose Tapestry Inc.'s proposed $8.5 billion acquisition of Capri Holdings Ltd..

Tapestry, known for brands like Coach and Kate Spade, aims to merge with Capri, which owns Michael Kors and Versace, potentially forming a major luxury company. Should the merger become successful, the now-one company could rank as the fourth-largest globally and the second-largest in the Americas, following LVMH. 

The FTC's upcoming meeting to deliberate on this matter signals the possibility of legal action to block the deal, sparking concerns among investors and raising questions about the future of the proposed merger.

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Why FTC is Blocking the Merger

The FTC is considering blocking Tapestry Inc.'s acquisition of Capri Holdings Ltd. due to concerns about creating a huge luxury company that could heavily compete with European fashion giants. 

The merger could potentially change market dynamics and raise antitrust issues. There are also worries about market share concentration and its potential negative impact on the fashion industry.

It's uncertain whether the acquisition is still on the table. However, recent statements from FTC officials regarding market share definitions have contributed to a decline in Capri's stock price, widening the gap between its current trading value and Tapestry's proposed acquisition offer.

READ MORE: Meta Pushes Back Against FTC's Antitrust Lawsuit, Citing Benefits to Consumers from Instagram, WhatsApp Acquisitions

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