2024-01-26 06:55:43 ET
Summary
- Tapestry is acquiring Capri Holdings for $57 per share, representing a 64.7% premium.
- The merger between the two luxury goods companies is projected to form the fourth-largest luxury goods company with a 5% market share.
- The deal has faced regulatory scrutiny with a second request, but I expect that the companies can address the more likely concerns to arise with solutions.
Capri Holdings (CPRI) is being acquired by Tapestry (TPR) for $57 per share. It was announced in August of 2023 and represented a 64.7% premium. The deal has been subjected to a 2nd request (I wrote about it here ). I still think the companies should be able to address the FTC's secondary request with modest concessions. This is a horizontal merger but the luxury goods market is diverse and fragmented with many brands. Some deliberately small even. The standard tool for measuring market concentration in such scenarios is the Herfindahl-Hirschman Index (HHI), where a score above 2500 signals a highly concentrated market. This merger involves two comparatively smaller entities in the industry, and their merger is projected to form the fourth-largest luxury goods company, with an approximate market share of 5%....
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Capri Holdings: Trading With 14.8% Upside To The Tapestry Deal Price