According to a report from The New York Times on Wednesday, the Federal Trade Commission (FTC) is preparing legal action to block Tapestry's (NYSE:TPR) proposed $8.5 billion acquisition of Capri Holdings Limited (NYSE:CPRI).
A potential deal would combine major fashion brands, including Versace, Michael Kors, and Coach .
The NYT said its sources familiar with the matter revealed that the FTC's five commissioners plan to convene next week for discussions on the matter, potentially leading to a formal vote on whether to file a lawsuit. However, they added that it is still possible the agency could choose not to sue.
The merger, aimed at creating an American luxury conglomerate capable of rivaling European giants like LVMH, has encountered regulatory scrutiny in the United States despite receiving approval from authorities in the European Union and Japan.
Investor sentiment has soured on the proposed acquisition, with Capri Holdings' shares plummeting by 22.25% this year. Premarket, CPRI is down a further 2.4%. Tapestry shares are up 1.9% premarket. This skepticism reflects doubts about whether the deal will ultimately proceed as planned.
The potential FTC intervention against Tapestry's acquisition of Capri Holdings represents a significant development in the fashion industry's regulatory landscape, underscoring broader shifts in antitrust enforcement priorities under the current administration.