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Update 11.20am: Update shares, adds Tapestry comment.
Capri Holdings (NYSE:CPRI) rose 0.6% following reports that the Federal Trade Commission is preparing to sue to block a planned $8.5 billion sale to Tapestry (NYSE:TPR).
The five FTC commissioners are expected to do so will meet this week to discuss the case, a move that likely comes before a formal vote on whether to proceed with a lawsuit, according to a New York Times Dealbook Report Wednesday, which cited two people with knowledge of the matter. People have warned that the regulator could still decide not to sue.
The FTC is expected to file the lawsuit as early as Monday, according to a separate Bloomberg report, which cited a person familiar with the matter.
The latest story comes after Capitol Forum reported late Friday that the FTC is likely to file a lawsuit to block the deal. The FTC is expected to vote on the settlement this month. On Monday, the FTC scheduled a closed-door meeting for next Monday, without specifying what the subject of the meeting would be.
Tapestry (TPR) responded to reports of a potential FTC lawsuit in a statement to CNBC on Wednesday.
“We cannot speculate on the FTC’s intentions, but we strongly believe this is an agreement worth clarifying as it is pro-consumer and pro-competition,” Tapestry said in the statement. “This combination involves six unique brands competing with hundreds of others in a dynamic and ever-expanding $200 billion global luxury market offering products across a broad range of categories and across a broad price spectrum. Consumers have hundreds of choices, from both established players and new entrants. We have full confidence in the merits of this transaction and in our legal arguments, should we make them.”
Tapestry (TPR) CEO Joanne Crevoiserat told CNBC on Tuesday that the company is still talking to the FTC about the deal and believes it could close by the end of the year.
“We are still talking to the FTC and are on track to close by the end of the year,” Crevoiserat told CNBC in an interview.
The Capri/Tapestry deal received a request for more information from the FTC in November. Recent reports indicate that the FTC would focus on whether the two are the closest substitutes for each other and whether the deal could impact jobs in the securities industry.
The European Commission approved the Capri Agreement (CPRI) on Monday. The transaction also received approval from Japan’s antitrust regulator last week, with the United States being the last regulator needed to close the transaction.
Tapestry (TPR) in early August entered into an agreement to acquire Capri (CPRI) for $57.00 per share in cash. The deal will bring together Coach, Kate Spade and Stuart Weitzman alongside Versace, Jimmy Choo and Michael Kors.