The Tapestry-Capri merger is officially off.
Tapestry announced the termination of the merger on 14 November, after a US judge blocked the deal on 24 October, following the Federal Trade Commission (FTC)’s motion to block the acquisition. At the time, the companies said they would jointly file a notice of appeal to the US Court of Appeals for the Second Circuit, which they did on 28 October.
Now, the companies have changed their tune. The two mutually agreed that terminating the merger agreement at this time is in both’s best interest, as the outcome of the legal process is uncertain and unlikely to be resolved by the 10 February 2025 outside date, per the release shared by Tapestry.
“The cancellation of the merger between Tapestry and Capri is, on balance, the right decision. The chances of winning an appeal were slim and time was running out to strike a deal,” says Globaldata managing director Neil Saunders.
For Tapestry’s part, the company is optimistic about its growth potential without Capri.
“We have always had multiple paths to growth and our decision today clarifies the forward strategy,” Tapestry CEO Joanne Crevoiserat said in a statement. “Building on our successful first quarter, we will move with speed and boldness to accelerate growth for our organic business. Tapestry remains in a position of strength, with distinctive brands, an agile platform, passionate teams and robust cash flow.”
Analysts are confident. “This is very good news for Tapestry,” says Aneesha Sherman, VP of US apparel and specialty retail at Bernstein. Saunders agrees, calling the cancellation a “lucky escape”, given concerns even at the time of the original offer that the Coach owner was overpaying. “Since then, Capri’s fortunes have sunk even lower and have made the price extremely overweight,” he says, adding that for Tapestry to revamp Capri’s brands as it did Coach, it would have taken a major amount of time and resources.
Tapestry also announced a $2 billion share repurchase authorisation, including a planned accelerated share repurchase programme, which experts had anticipated would be the case, should the deal not materialise. There will be a total of $2.8 billion available for share repurchases over this fiscal year and beyond, according to Tapestry.
Tapestry reaffirmed its fiscal 2025 outlook that it shared in its first-quarter earnings update earlier this month, and noted that it will update its outlook at its next earnings announcement on 6 February 2025.
Capri, on the other hand, is left with a choppier outlook. The company’s revenues were down a further 16 per cent for the second quarter of 2025, following the merger block. “An enormous amount of corrective action is needed to get things back on track,” Saunders says.
In Sherman’s view, a Capri break-up could be the best option for shareholder value. In an 8 November note (after the block; before the deal was called off), she noted that the market has shown “clear interest” in both Versace and Jimmy Choo, citing shareholder interest before Capri purchased both brands back in 2017, and 2023 discussions about sales for both prior to the Tapestry agreement.
It’s not all good news for Tapestry, though. The Capri acquisition offered a path for achieving its ambition to establish itself as a bigger house of luxury brands, Saunders flags. “However, the group is strong and has some good assets, especially in Coach, so it will still be able to produce pleasing sales and profit numbers. Over time, it will be able to pursue future growth by selectively adding more brands to its portfolio if it finds the right opportunities to do so.”
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