**Tapestry and Capri to Appeal FTC's Blocking of $8.5 Billion Merger**

In a striking turn of events, the Federal Trade Commission's (FTC) preliminary injunction has halted Tapestry’s intended $8.5 billion acquisition of Capri Holdings, leaving Tapestry disheartened and insistent that the ruling is legally and factually flawed. The fashion conglomerate contends that the industry landscape is fiercely competitive, with diverse challenges from both budget and premium market segments. Tapestry maintains that the merger would drive competitiveness and benefit consumers.

Despite the disheartening court decision, both Tapestry and Capri have confirmed their intention to jointly appeal, adhering to the terms set forth in their merger agreement. The ruling aligns with the FTC’s administrative complaint and legal stance that the merger would reduce significant competition between the two companies. Henry Liu, the Director of the FTC's Bureau of Competition, previously cautioned that the deal could detrimentally affect consumer choices and workers' benefits, including wages and working conditions.

Since August 2023, when the merger news surfaced, Tapestry had high hopes for the acquisition to spearhead a new phase of growth. Analyst firm GlobalData noted that recent financial reports had left Tapestry exposed as it faced declining demand. In particular, Tapestry’s performance in Q3 underscored the need for the Capri merger to stabilize and enhance its market standing. GlobalData remarked that, although the price offered for Capri was substantial, the merger was pivotal for Tapestry’s strategic maneuvering.

Retail analyst Pippa Stephens from GlobalData highlighted that Capri itself had been struggling with a faltering brand image and a declining share price in recent years. Stephens pointed out that Tapestry aimed to rejuvenate Michael Kors' brand under Capri and elevate its market position. The deal was also seen as a strategic move for Tapestry to solidify its status against European luxury giants like LVMH and Kering, particularly within the 'affordable luxury' sector.

The combined appeal by Tapestry and Capri will now challenge the FTC's injunction, as both companies continue to argue the merger’s potential benefits in enhancing industry competition and consumer value.