Tapestry has announced plans to appeal a US court ruling blocking their acquisition of Capri.
- The US Federal Trade Commission argued the merger reduces competition among handbag makers.
- Judge Rochon rejected Tapestry’s defence, stating handbags hold significant value for many consumers.
- Tapestry believes the decision is legally and factually flawed and intends to challenge it.
- The acquisition was set to combine major luxury brands, creating a US fashion giant.
Tapestry’s intention to appeal follows a court decision impeding its planned acquisition of Capri Holdings, valued at $8.5bn (£6.7bn). The ruling came after the Federal Trade Commission (FTC) contended that the merger would diminish competition in the luxury handbag sector. Specifically, the FTC argued that such a move would lead to increased pricing power for the newly merged entity, to the detriment of consumers.
In a detailed examination, US District Judge Jennifer Rochon concluded that Tapestry’s defence, which suggested handbags were nonessential items and that consumers could counteract price hikes by choosing not to purchase, failed to acknowledge the intrinsic value handbags hold for many women. Judge Rochon highlighted that handbags serve not only as fashion statements but also fulfil functional roles in everyday life, thereby reinforcing their demand.
In response to the court’s decision, Tapestry expressed disappointment, characterising the ruling as erroneous in both law and fact. The company released a formal statement, asserting that the luxury fashion industry is highly competitive, with pressures emanating from products across various price points. Tapestry maintains that its proposed merger with Capri is actually beneficial to competition and consumers alike.
Initially announced in August 2023, the acquisition aimed to amalgamate well-known luxury brands, including Coach, Kate Spade, Stuart Weitzman, Versace, Jimmy Choo, and Michael Kors, under Tapestry’s umbrella, establishing a formidable presence in the US luxury market. Despite the setback, Tapestry remains committed to pursuing the merger, reflecting its strategic vision to broaden its reach and influence within the industry.
Tapestry is steadfast in its pursuit to overturn the court ruling and advance its acquisition of Capri Holdings.
