Capri Holdings Faces Class Action as Stock Price Plummets Amid FTC Investigation of Merger Deal

Capri Holdings Faces Legal Challenges Due to FTC Scrutiny of Tapestry Acquisition

In a significant turn of events for Capri Holdings Limited, also known as CPRI, Pomerantz Law Firm has announced the initiation of a class action lawsuit on behalf of investors. The firm is probing claims that the retailer may have engaged in deceptive practices related to a proposed merger with Tapestry, Inc., a competitor in the luxury goods market.

The roots of this legal scrutiny can be traced back to August 2023, when Capri announced its agreement to merge with Tapestry for a cash purchase price of $57 per share. Notably, Capri Holdings owns the well-recognized Michael Kors brand. This merger was positioned as a strategic move to enhance both companies' market presence in the luxury sector.

However, recent developments have cast a shadow over this merger agreement. On November 6, 2023, both Capri and Tapestry received requests for additional information from the Federal Trade Commission (FTC). This inquiry is part of the FTC's antitrust review of the acquisition, designed to assess whether the merger would unfairly limit competition within the accessible luxury handbag market, particularly affecting brands like Kate Spade and Coach owned by Tapestry.

Following the news of the FTC's investigation, Capri's stock prices witnessed a steep decline, plunging from $50.66 to $48.82 in a single day. This downturn continued throughout 2024 as the FTC expressed increasing concerns regarding the merger’s potential impact on competition. Particularly alarming for investors were comments made by FTC Bureau of Competition Director Henry Liu at the American Bar Association's spring meeting, which hinted at possible enforcement actions targeting acquisitions like Capri's.

On April 22, 2024, the FTC escalated its challenge by filing a lawsuit to block the merger, alleging that it would eliminate crucial competition between the involved brands. Following this announcement, Capri’s stock plummeted further, closing at $34.81 by April 25, 2024.

The culmination of these events occurred on October 24, 2024, when a federal judge granted the FTC's motion to preliminarily block the merger, resulting in a staggering drop in Capri's stock price from $41.60 to $21.26 the following day; a nearly 50% decrease.

This drastic decline in stock value, coupled with the FTC's legal action, has spurred Pomerantz Law Firm to investigate potential securities fraud and other unlawful business practices potentially carried out by Capri and its executives. Investors are being urged to come forward and join the class action, as their rights may have been compromised due to misleading information or lack of transparency from the company.

The Pomerantz Law Firm, known for its expertise in corporate and securities litigation, emphasizes that the firm is committed to advocating for the rights of shareholders and recovering damages for those affected by corporate misconduct. This case serves as a stark reminder of the importance of ethical practices within the corporate sphere, particularly in significant merger proceedings that could reshape market dynamics.

For more information on joining the class action or discussing their legal options, shareholders can reach out to Danielle Peyton at Pomerantz LLP. As the situation unfolds, investors will be closely monitoring how these allegations and the ongoing legal battle will impact Capri's future.

This class action could set a precedent for similar cases in the luxury branding market and the broader implications of business acquisitions, making it a crucial moment for Capri Holdings and its stakeholders.