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Capri-Tapestry Jitters & The Wrath of Khan

lina khan
Tapestry has to reimburse Capri for expenses up to $50 million if Lina Khan brings down the hammer, but nobody’s losing their third home over this. Photo-Illustration: Puck; Photos: Slaven Vlasic/Getty Images for The New York Times/Eduardo Munoz Alvarez/VIEWpress via Getty Images
Lauren Sherman
April 22, 2024

At 11 a.m. today, a closed-door meeting was scheduled at the Federal Trade Commission to discuss Tapestry’s $8.5 billion impending takeover of Capri, a consolidation of two American fashion mini-conglomerates attempting to bulk up against their mightier European rivals. It’s increasingly likely that the activist commissioner Lina Khan will sue to stop it—a disappointing outcome for everyone involved, especially Capri C.E.O. John Idol, who already made bank taking Michael Kors public in 2011, but is perhaps one deal away from the eternal golf course. It’s also unpleasant news for Tapestry C.E.O. Joanne C. Crevoiserat, who will celebrate her Time 100 inclusion on Wednesday night.

Everyone in our world is speculating about what happens if the merger falls apart. Many are focused on the Versace outcome—it’s so valuable, it’s luxury, they should sell it! But Versace is still small, with just over a billion dollars in sales in 2023. In reality, the F.T.C. doesn’t care about Versace, or the shoe businesses—Tapestry’s Stuart Weitzman, Capri’s Jimmy Choo—which are also relatively tiny. Instead, the agency is fixated on the consolidated power of Coach and Michael Kors, two leaders in the mid-priced North America handbag market and, most importantly, its off-price handbag market. (I’ve heard some estimates suggesting the two brands comprise upward of 70 percent of the latter.) That market position could allow Tapestry to raise prices by, say, $5 per bag, which could potentially increase their profits by hundreds of millions of dollars and arguably screw real Americans. A $5 bump may not sound like much, but it’s something. Anyway, the F.T.C. is all about consumer empowerment. And Khan, a mid-30s ideologue without much experience beyond the ivory tower, has made this one of the frostiest periods for corporate mergers in a generation.