(Reuters) – Tapestry said on Thursday it was ending its $8.5 billion bid for Michael Kors owner Capri after the deal was blocked by a U.S. judge, ending an effort to create a U.S. luxury giant that would compete with major European players.
The deal would have brought six brands under one roof: Tapestry’s Coach, Kate Spade and Stuart Weitzman; and Capri’s Versace, Jimmy Choo and Michael Kors. But regulators sued to block the deal earlier this year, citing the effect on consumer prices.
Shares of Tapestry were up 5% in premarket trading, while those of Capri lost 3%. In a statement, Tapestry said it does not expect any acquisitions in the near-term.
The U.S. Federal Trade Commission (FTC) sued to block the deal in April, saying it would eliminate “direct head-to-head competition” between the top two U.S. handbag makers. In a September trial, the regulator argued the Tapestry-Capri deal would create a massive company with the power to unfairly raise prices on everyday consumers.
U.S. District Judge Jennifer Rochon sided with the FTC, rejecting the companies’ defense.
The companies said they mutually agreed that ending the merger agreement was in their best interest, as the outcome of the legal process is uncertain and unlikely to be resolved by the Feb. 10, 2025 outside date.
Capri has reported several straight quarters of sales decline since the deal was announced in August last year.
Tapestry said it has agreed to reimburse Capri’s expenses incurred in connection with the transaction of about $45 million.
(Reporting by Savyata Mishra in Bengaluru; Editing by Shinjini Ganguli)
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