Capri tumbles 46% after US court blocks $8.5 bln merger with Tapestry
Updates shares, adds offer price in paragraph 3 and analyst comments in paragraphs 7 and 11
By Ananya Mariam Rajesh
Oct 25 (Reuters) -Capri sharesCPRI.N slumped nearly 46% on Friday after a U.S. judge blocked its pending $8.5 billion merger with Coach parentTapestry <TPR.N>, hurting the Michael Kors owner's chances of navigating challenges at the luxury brand.
Tapestry agreed to buy Capri last year to create a U.S. luxury giant that could compete better with larger European rivals bybringing brands Coach, Kate Spade, Stuart Weitzman, Versace, Jimmy Choo and Michael Kors under one roof.
Capri stock was trading at $22.46, well below Tapestry's offer price of $57 per share, and was set to wipe out $2.2 billion from its market cap.
Execution issues across Capri's wide portfolio of brands have led to market share losses at a time when the broader luxury market faces a slowdown in demand, with consumers earmarking their dollars for essential purchases.
The Federal Trade Commission (FTC) sued to block the deal in April, saying it would eliminate "direct head-to-head competition" between the top two U.S. handbag makers.
Should the deal fall through, "Capri could potentially seek another suitor", said Dana Telsey of Telsey Advisory Group.
"The attractiveness of the acquisition began to moderate", pressured by Capri's weak results and an extension of the deal timeline following the FTC challenge, Dana said.
Tapestry's shares rose nearly 15%. Analysts said the deal would have posed an addedrisk to the Coach parent even though it was well-positioned to revive Capri.
During an eight-day trial in September, the FTC argued the deal would create a massive company with the power to unfairly raise prices.
U.S. District Judge Jennifer Rochon on Thursdayrejected the companies' defense, including their argument that handbags are non-essential items and consumers can control the prices by not buying them if they become too expensive.
"Investors were clearly surprised by the outcome as it seemed like the focus of the deal was to compete at global luxury level and not just the U.S. market," said Brian Jacobsen, chief economist at Annex Wealth Management.
Tapestry said it believes the ruling was incorrect and plans to appeal.
"I think the (defense) parties might try to get an expedited appeal to the second circuit. I think they do have a chance on their timeline to do that," said Mike Keeley, partner and chair of the antitrust group at Axinn, Veltrop & Harkrider LLP.
Reporting by Ananya Mariam Rajesh in Bengaluru and Siddharth Cavale in New York; Editing by Devika Syamnath
Berita Terbaru
Pengungkapan: Entitas XM Group menyediakan layanan khusus eksekusi dan akses ke Fasilitas Trading Online kami, yang memungkinkan Anda untuk melihat dan/atau menggunakan konten yang tersedia pada atau melalui situs, yang tidak untuk mengubah atau memperluas, serta tidak mengubah atau memperluas hal tersebut. Akses dan penggunaan ini selalu sesuai dengan: (i) Syarat dan Ketentuan; (ii) Peringatan Risiko; dan (iii) Pengungkapan Penuh. Oleh karena itu, konten disediakan hanya sebagai informasi umum. Anda juga harus ketahui bahwa konten Fasilitas Trading Online kami bukan sebagai ajakan atau tawaran untuk untuk melakukan transaksi apa pun di pasar finansial. Trading di pasar finansial mana pun melibatkan tingkat risiko yang signifikan pada modal Anda.
Semua materi yang diterbitkan di Fasilitas Trading Online kami hanya untuk tujuan edukasi/informasi dan tidak boleh mengandung nasihat dan rekomendasi finansial, pajak investasi atau trading, catatan harga trading kami, penawaran, permintaan, transaksi dalam instrumen finansial apa pun atau promo finansial untuk Anda yang tidak diminta.
Konten pihak ketiga apa pun, serta konten yang disiapkan oleh XM, seperti opini, berita, riset, analisis, harga, informasi lain atau link ke situs pihak ketiga yang tersedia "sebagaimana adanya", sebagai komentar pasar umum dan bukan menjadi nasihat investasi. Sejauh konten apa pun ditafsirkan sebagai penelitian investasi, Anda harus memperhatikan dan menerima bahwa konten tersebut tidak dimaksudkan dan belum disiapkan sesuai dengan persyaratan hukum yang dirancang untuk mempromosikan kemandirian riset investasi dan dengan demikian akan dianggap sebagai komunikasi pemasaran di bawah hukum dan peraturan yang relevan. Mohon dipastikan bahwa Anda telah membaca dan memahami Notifikasi pada Riset Investasi Non-Independen dan Peringatan Risiko kami mengenai informasi di atas, yang dapat diakses disini.
