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A judge set Sept. 9 as the start date for the court hearing on the US Federal Trade Commission’s bid to block Tapestry Inc.’s attempted takeover of rival Capri Holding Ltd.
The preliminary injunction hearing will likely last a week and a half, the judge said. If the judge grants an injunction, that would prevent the companies from merging until after the FTC’s in-house court has a chance to decide the deal’s legality.
“I’m going to work to keep the case moving very quickly,” Judge Jennifer Rochon said during a hearing Monday in Manhattan federal court.
Tapestry shares rose 2.3 percent to $40.98 in New York trading Monday. Capri shares gained 0.8 percent to close at $35.83.
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The FTC sued last week to block the $8.5 billion tie-up between the owners of Coach and Michael Kors, alleging the deal would raise prices on handbags and accessories in the affordable luxury sector.
Lawyers for the FTC told the judge that the merger between Tapestry, which owns the Coach, Kate Spade and Stuart Weitzman brands, and Capri, which runs Michael Kors, Versace and Jimmy Choo, would “eliminate fierce head-to-head competition” in the market in which both companies compete. A tie up would lead to “undue concentration” in the accessible luxury market, FTC lawyer Abby Dennis said.
Lawyers for both companies pushed back on the FTC’s allegations, reiterating that the handbag market in the US is competitive. They told Rochon they were unclear about how the agency was defining the accessible luxury market and requested more clarifying details from the FTC, such as whether a specific price range applies. “We’re kinda shooting in the dark here,” Al Pfeiffer, a lawyer representing Tapestry, said. “We cannot tell what the parameters are,” he added.
Tapestry lawyers also said they plan to subpoena competitors in the US handbag sector to gather details on how the market works to present to the judge. Rochon said there was “significant discovery that needs to take place.”
By Leah Nylen and Jeannette Neumann
Learn more:
Shares of Versace Owner Capri Seen Falling 30% If Deal With Coach Owner Tapestry Fails
Since the merger announcement, Capri has reported weaker-than-forecast earnings twice, spurring concern about its performance in the coming quarters.
