Shares of Capri Holdings, the parent company of luxury accessory brand Michael Kors, plummeted Friday after a judge on Thursday blocked its $8.5 billion buyout from Coach-owner Tapestry.
The judgment comes after the Federal Trade Commission argued against the merger during an eight-day trial. The regulator claimed the deal would eliminate competition between the top two U.S. handbag makers and create a company with the power to unfairly raise prices for customers.
Tapestry argued that the acquisition was necessary to compete against European players such as Gucci, which are grabbing market share, Reuters reported.
Tapestry and Capri announced the $8.5 billion deal in August 2023. The merger would have combined Tapestry's Coach, Kate Spade and Stuart Weitzman brands with Capri's Jimmy Choo, Michael Kors and Versace portfolio. The two fashion firms said the combination would have generated more than $200 million in expected cost synergies within three years of closing.
The FTC initially moved to block the acquisition in April and sought a preliminary injunction, which was granted Thursday.
Following the injunction, Tapestry and Capri released statements saying they plan to appeal the ruling.
Capri, Tapestry Stock
Shares of Michael Kors parent Capri tumbled nearly 45% Friday, to its lowest level since November 2020.
Capri stock has unraveled almost 58% this year after Friday's drop.
TPR stock rallied 13.5% Friday. Tapestry shares jumped to their highest level since October 2018 on the move.
TPR stock leapt 37.2% in 2024.
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