Capri Holdings Stock Price Rises Amid FTC Lawsuit Rumors Against Tapestry Acquisition

Capri Holdings (NYSE:CPRI) saw a 1.9% increase in its stock price on Friday as reports indicated that the Federal Trade Commission plans to sue to block its sale to Tapestry (NYSE:TPR). This comes after the European Commission approved the deal and Japan's antitrust regulator also gave its nod. The FTC is reportedly concerned about whether the two companies are close substitutes and the potential impact on jobs in the handbag industry. A TD Cowen analyst suggested that if the sale is terminated, CPRI's stock could drop to the high-teens to low $20s range. However, there is still optimism that the deal will proceed, with Tapestry expressing confidence in the transaction's merits.

Key Takeaways

• Capri Holdings (CPRI) rose 1.9% ahead of the expected Federal Trade Commission lawsuit to block the sale to Tapestry (TPR).
• The FTC is reportedly evaluating whether the sale will impact jobs in the handbag industry and if the two companies are close substitutes.
• The European Commission approved the Capri (CPRI) deal, and approval from the U.S. is the final step needed for the transaction to close.
• A TD Cowen analyst suggested that if the planned sale to Tapestry is terminated, Capri (CPRI) could see downside to the "high-teens" to low $20s per share.
• Tapestry (TPR) expressed confidence in the transaction's merits and legal arguments amidst potential FTC challenges.

Analysis

The FTC's plan to sue to block Capri Holdings' sale to Tapestry could have significant repercussions. If the sale is terminated, Capri's stock could plummet, potentially impacting investor confidence. The legal battle may also affect Tapestry's future prospects and could create uncertainty in the handbag industry. The FTC's concerns about job impacts and product substitutes raise questions about the deal's potential consequences. This news could also lead to increased scrutiny of similar mergers and acquisitions in the fashion and luxury goods sector, potentially influencing future business strategies and regulatory actions.

Did You Know?

• The FTC's Concerns: The Federal Trade Commission (FTC) is evaluating whether the sale of Capri Holdings (CPRI) to Tapestry (TPR) will impact jobs in the handbag industry and if the two companies are close substitutes.
• Potential Stock Impact: According to a TD Cowen analyst, if the sale to Tapestry is terminated, Capri Holdings (CPRI) could see downside to the "high-teens" to low $20s per share.
• Tapestry's Confidence: Tapestry (TPR) has expressed confidence in the transaction's merits and legal arguments amidst potential FTC challenges.