Versace Parent Capri Stock Tumbles as Judge Blocks Merger With Coach Owner

Capri Holdings (CPRI) shares are plummeting nearly 50% in premarket trading Friday after a federal judge blocked Coach owner Tapestry’s (TPR) $8.5 billion acquisition of the Versace and Michael Kors parent.

Shares of Tapestry, which also owns the Kate Spade and Stuart Weitzman brands, are surging 15% after the ruling, which sided with antitrust regulators in arguing that the combination would hurt competition and lead to higher prices.

The luxury brands announced the deal last year but the Federal Trade Commission (FTC) sued to block their merger, saying the combined firm would have too much power and reduce competition in the market for accessible luxury handbags.

On Thursday, Southern District of New York judge Jennifer Rochon granted the FTC’s motion for a preliminary injunction to block the proposed merger in a 169-page ruling.

Capri and Tapestry Plan To Appeal Ruling

Both Capri and Tapestry said they would appeal.

“Tapestry and Capri operate in an industry that is intensely competitive and dynamic, constantly expanding, and highly fragmented among both established players and new entrants,” Tapestry said. “We face competitive pressures from both lower- and higher-priced products and continue to believe this transaction is pro-competitive and pro-consumer.”

The companies combined to have more than $12 billion in annual sales in fiscal 2023, but that’s still a fraction of those reported by European luxury rivals like LVMH, which notched 86.2 billion euros ($93.3 billion) in sales last year.

Including Friday’s premarket moves, Tapestry shares have added nearly 40% this year, while those of Capri have dropped 57%.