A US judge has temporarily halted an $8.5 billion merger between Tapestry Inc (NYSE:TPR) and Capri, blocking the combination of major fashion brands such as Michael Kors, Kate Spade, and Coach.
Judge Jennifer Rochon’s decision, issued on Thursday, pauses the deal while the Federal Trade Commission (FTC) completes its review. Capri’s stock fell over 50% after hours following the ruling, while Tapestry’s rose 12%.
The FTC first challenged the deal in April, claiming it would lead to higher prices and lower quality in the “accessible luxury” handbag market.
FTC Competition Bureau director Henry Liu praised the ruling as beneficial for consumers by preserving competition. Rochon noted that the combined company would dominate 59% of the affordable-luxury market, exceeding typical antitrust limits.
Tapestry expressed disappointment, arguing the handbag sector remains highly competitive and said it plans to appeal. Capri has yet to respond publicly. The outcome could impact future mergers among global luxury brands.