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The Federal Trade Commission is leaning toward filing a lawsuit to block Tapestry's business (New York Stock Exchange: TPR) planned to acquire Capri Holdings for $8.5 billion (New York Stock Exchange: CPRI).
While no decision has been made at this time, the FTC is expected to vote on the transaction this month, according to traders, who cited a Capitol Forum report Friday night that 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 American Bar Association's 2024 Spring Antitrust Meeting was held in Washington, DC this week.
At the meeting, FTC Bureau of Competition Director Henry Liu is said to have made some comments about the agency focusing on direct competition, not necessarily market definition. Although the Capri/Tapestry deal was not specifically mentioned, some investors were concerned that the regulator may be referencing the deal through its comments.
The report comes as the European Commission faces a Monday deadline to decide whether to move its investigation into the transaction into an in-depth review.
Capri (CPRI) shares have fallen over the past three days, falling 11% to the lowest levels since the $8.5 billion acquisition was announced in August. The deal 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.
In early August, Tapestry (TPR) reached an agreement to acquire Capri (CPRI) for $57.00 per share in cash. The deal will combine Coach, Kate Spade and Stuart Weitzman with Versace, Jimmy Choo and Michael Kors.
A possible FTC lawsuit comes as the regulator, especially under the Biden administration and FTC Chair Lina Khan, has been vigilant about antitrust enforcement and has filed lawsuits to block several deals. In January, amazon (AMZN) abandoned a $1.4 billion purchase of robot vacuum maker iRobot (IRBT) amid reports that the FTC was expected to file a lawsuit to block the deal.
On Thursday, amazon (AMZN) CEO Andy Jassy said he believes regulators may be acting outside the bounds of the law in some recent matters.
“There are some acquisitions happening, but we're taking up a lot of time and taxpayer money with what we're doing right now, and I think a lot of that is outside the bounds of the law.” now,” Jassy said in aamazon-ceo-andy-jassy-speaks-with-cnbcs-andrew-ross-sorkin-on-squawk-box-today.html” target=”_blank”> interview with CNBC Thursday. “I think right now in Western countries we need to be careful about how we handle regulation.”
