Blockbuster Handbag Merger Blocked: FTC's Victory Against Tapestry-Capri Deal

A U.S. judge has halted the merger between Tapestry and Capri, valued at $8.5 billion. The decision is a win for the FTC, which argued the deal would harm competition in the American handbag market, potentially elevating consumer prices. Capri’s shares plummeted while Tapestry's rose post-ruling.

A U.S. judge has officially blocked the planned $8.5 billion merger between handbag giants Tapestry and Capri, marking a significant victory for the Federal Trade Commission (FTC). The decision is anticipated to quash the merger permanently, proving a triumph both for regulators and consumers concerned about rising prices.

The FTC's case, presented at an eight-day trial in New York, argued that the merger would suppress competition between the leading U.S. handbag producers, potentially allowing the merged entity to skew prices unfairly. The ruling caused Capri's shares to plunge by 47%, whereas Tapestry's shares experienced a 13% boost in after-market trading.

Tapestry contended that the merger was a strategic move to counter European competition, but the judge dismissed this claim, stating the potential harm to market competition outweighed prospective benefits. Regulators from Japan and the EU had previously approved the deal, but the U.S. ruling puts the merger's future in jeopardy.

(With inputs from agencies.)