Luxury goods industry $8.5 billion blockbuster merger falls through! Coach's parent company Tapestry (TPR.US) and Capri (CPRI.US) have agreed to terminate the merger deal.

Fashion luxury group Capri Holdings (CPRI.US) and Tapestry (TPR.US) have agreed to terminate their $8.5 billion merger deal. In a statement, both companies stated, "Capri and Tapestry have mutually agreed that terminating the merger agreement at this time is in the best interest of both companies, as the outcome of legal proceedings remains uncertain and unlikely to be resolved before February 10, 2025." Tapestry reached an agreement in August last year to acquire Capri for $57.00 per share in cash. A federal judge blocked the deal on grounds that it violated competition regulations, causing regulatory hurdles for the transaction. U.S. District Judge Jennifer Loh approved a preliminary injunction motion by the Federal Trade Commission (FTC) to halt the deal. The FTC filed a lawsuit in April seeking to block the deal, claiming that the merger would eliminate competition between Coach, Kate Spade, and Michael Kors, particularly in the "accessible luxury" market. Tapestry and Capri argued at the time that the Commission's definition of the market for "affordable luxury" was not relevant and that handbag retailers have been competing with hundreds of other handbag manufacturers and new entrants. The deal will not incur any termination fee. Tapestry has agreed to reimburse Capri approximately $45 million in expenses related to the transaction. Tapestry also announced an additional $2 billion stock buyback authorization, including an accelerated share repurchase program. The fashion company also expects to maintain an annual dividend rate of $1.40 per share in the 2025 fiscal year and does not anticipate any acquisitions in the near future. The company plans to redeem priority notes related to the planned sale at a price equal to 101% of principal and accrued interest, totaling $6.1 billion.