FTC and Tapestry Clash Over Capri Merger
The Federal Trade Commission (FTC) is attempting to block Tapestry Inc.’s $8.5 billion acquisition of Capri Holdings, arguing that the deal would harm consumers by eliminating competition in the handbag market.
Tapestry has defended the merger, stating that it is essential for revitalizing Michael Kors, a brand that has seen declining sales since the deal was announced. Tapestry labeled themselves as a savior for Michael Kors in response to the FTC’s accusations.
The FTC warns that the merger would create a dominant force in the accessible luxury handbag sector, but Tapestry challenges this notion. Tapestry disputes the FTC’s views on the market, emphasizing that consumers have a wide array of choices and preferences when it comes to purchasing handbags.
Tapestry argues that the fashion industry is intricate and diverse, with numerous brands competing in the market. The company stresses that consumers’ purchasing decisions for handbags are often driven by emotion, style, and functionality rather than fixed market boundaries defined by the FTC.
Tapestry is confident that the merger will not result in a monopoly, as Coach, Kate Spade, and Michael Kors combined would represent less than 30% of sales in a properly defined market. The company is scheduled to present its case to regulators in a virtual meeting on Monday.
Despite the legal showdown, Tapestry remains determined to finalize the acquisition of Capri Holdings by the end of the year.