LONDON - Capri Holdings Limited (NYSE:CPRI), a prominent player in the global fashion luxury market, announced its intention to contest the U.S. Federal Trade Commission's (FTC) challenge to its proposed acquisition by Tapestry, Inc. (NYSE:NYSE:TPR). The merger, which has been approved by all other required jurisdictions, faced an unexpected obstacle when the FTC raised concerns about potential anti-competitive effects.
The company argues that the luxury fashion industry is highly competitive and fragmented, offering consumers a vast array of choices across various price points and channels. Capri Holdings, which houses iconic brands such as Versace, Jimmy Choo, and Michael Kors, believes that the FTC's challenge overlooks the market realities and insists that the acquisition will not hinder competition. The firm plans to defend the merger vigorously in court alongside Tapestry.
Capri Holdings expressed confidence in the value the merger would bring to stakeholders, despite the FTC's reservations. The company's statement emphasized the diverse and competitive nature of the luxury market, highlighting low barriers to entry and the abundance of handbag options available to consumers.
The FTC's challenge stands as the sole regulatory roadblock to the acquisition, a point that Capri Holdings underscored in its defense. The company's commitment to its luxury brands and their distinctive heritage was reaffirmed, with an emphasis on their dedication to craftsmanship and style.
While Capri Holdings remains optimistic about the merger's completion, it is important to note that this press release contains forward-looking statements. These statements are based on current expectations and projections about future events and are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those anticipated.
InvestingPro Insights
As Capri Holdings Limited (NYSE:CPRI) stands firm against the FTC's challenge to its proposed merger with Tapestry, Inc., insights from InvestingPro shed light on the company's financial health and market performance. With a market capitalization of $4.43 billion USD, Capri Holdings is a significant player in the luxury fashion sector. The company's aggressive share buyback strategy, as indicated by an InvestingPro Tip, reflects management's confidence in the company's value. This is further supported by Capri's impressive gross profit margins, which stood at 64.94% over the last twelve months as of Q3 2024.
InvestingPro Data also reveals a P/E ratio of 21.69, which adjusts down to 12.01 when considering the last twelve months as of Q3 2024, suggesting a potentially more attractive valuation in a historical context. Despite the challenges faced over the last month, where the stock price has seen a 14.93% decline, another InvestingPro Tip highlights that the stock is currently in oversold territory according to the Relative Strength Index (RSI), possibly indicating a buying opportunity for investors.
While the FTC's concerns pose a hurdle, Capri Holdings' financial resilience and market position may offer reassurance to stakeholders. The company has been profitable over the last twelve months, and analysts predict it will remain profitable this year, despite expectations of a net income drop. For investors seeking a deeper dive into Capri Holdings' prospects, there are 16 additional InvestingPro Tips available, which can be accessed with a subscription. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering a comprehensive toolkit for informed investment decisions.
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