The CEO of Capri Holdings Ltd. told a federal judge he’s hopeful the company’s planned $8.5 billion acquisition by Tapestry Inc.
, which US antitrust enforcers are trying to block, will revitalize its flagship Michael Kors brand and deliver returns for investors. John Idol was the first witness in a make-or-break hearing in Manhattan to determine whether the fashion industry deal will go forward or be unwound by President Joe Biden’s Federal Trade Commission, which calls it a threat to competition and is in court seeking an order to freeze it. The companies are fighting to save a tie-up that would would marry Tapestry’s Coach, Kate Spade and Stuart Weitzman brands with Capri’s Michael Kors, Versace and Jimmy Choo labels.
It’s the first fashion industry challenge under FTC Chair Lina Khan as the agency has worked to sink a raft of takeovers in sectors from tech to groceries, with mixed results. Among the investors watching the legal battle closely are Wall Street’s merger arbitragers, who bet on whether a deal will live or die. Most arbs currently give Tapestry and Capri a better-than-even chance of closing the transaction.
David Einhorn’s Greenlight Capital is among those betting the merger will go through. Amid the hearing, which started on Monday morning with opening arguments, Capri shares closed up 5.1% to $36.
55, moving closer to Tapestry’s $57-a-share takeover bid. One of the companies’ central arguments is that Michael Kors needs the deal to revitali.