Editorial Sitthipong Pengjan/iStock via Getty Images
The Federal Trade Commission is likely to file a lawsuit to block Tapestry (NYSE:TPR) planned the $8.5 billion acquisition of Capri Holdings (NYSE: CPRI).
While no decisions have been made at this point, the FTC is expected to vote on the settlement month, according to traders, who cited a Capitol Forum report from last Friday, which cited people familiar with the matter. It’s not a foregone conclusion that the FTC will sue to block the deal.
The Capri/Tapestry deal received a request for more information from the Federal Trade Commission in November. The latest story comes after the 2024 American Bar Association spring antitrust meeting was held in Washington, D.C. this week.
FTC Bureau of Competition Director Henry Liu is said to have made some comments about the agency focusing on head-to-head competition, not necessarily market definition, during the meeting. While the Capri/Tapestry deal was not specifically mentioned, some investors were concerned that the regulator might reference the deal through its comments.
The report comes as the European Commission has a Monday deadline to decide whether to move its investigation into the transaction into an in-depth review.
Shares of Capri (CPRI) have fallen over the past three days, falling 11% to their lowest levels since the $8.5 billion acquisition was announced in August. The deal’s spread is also the widest since the deal was unveiled. Some traders and analysts believe Capri (CPRI) stock could be worth around $30 per share on a standalone basis if the deal is blocked.
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.
A potential FTC lawsuit comes as the regulator, particularly under the Biden administration and FTC Chair Lina Khan, has been vigilant about antitrust enforcement and sued to block several deals. In January, Amazon ( AMZN ) backed out of its $1.4 billion purchase of robot vacuum cleaner maker iRobot ( IRBT ) after reports that the FTC was expected to sue to block the deal.
Amazon ( AMZN ) CEO Andy Jassy said Thursday that he believes regulators may be acting outside the bounds of the law in some recent matters.
“There are some acquisitions going on, but, you know, we’re consuming a lot of taxpayer time and money with what we’re doing right now, and I think a lot of that is outside the bounds of the law, right now,” he said Jassy in an interview with CNBC on Thursday. “I think we need to be careful right now in Western countries in how we handle regulation.”