10:40 AM EST, 11/14/2024 (MT Newswires) -- Tapestry (TPR) terminated its proposed acquisition of Michael Kors and Versace parent Capri (CPRI) due to uncertainty regarding regulatory approvals, the companies said in separate Thursday statements.

The luxury fashion giants agreed to end the deal as the required condition of receiving regulatory clearance was unlikely to be met before the transaction's outside date of Feb. 10. Tapestry's shares jumped 12% in Thursday trading, while Capri declined 3.2%.

"Capri and Tapestry mutually agreed that terminating the merger agreement at this time is in the best interest of both companies," Tapestry said in its statement.

In August 2023, Coach and Kate Spade owner Tapestry agreed to acquire Capri in a deal worth $8.5 billion to establish a global luxury and fashion brand. At the time, the companies said they expected to complete the transaction in 2024, subject to approval from regulators.

The US District Court for the Southern District of New York last month approved the Federal Trade Commission's motion for a preliminary injunction against the deal amid concerns it would reduce competition in the market for "accessible luxury" handbags and unfairly lift prices. The FTC issued its administrative complaint and authorized a lawsuit against the merger in April.

"We have always had multiple paths to growth and our decision today clarifies the forward strategy," Tapestry Chief Executive Joanne Crevoiserat said in a statement. "Building on our successful first quarter, we will move with speed and boldness to accelerate growth for our organic business."

Tapestry reiterated its fiscal 2025 outlook issued last week. It expects adjusted earnings to be in a range of $4.50 to $4.55 per share and revenue to grow about 1% to 2% versus prior year on a reported and constant-currency basis to over $6.75 billion. The current consensus on Capital IQ is for normalized EPS of $4.57 and revenue of $6.76 billion.

Tapestry's board also approved a new $2 billion share repurchase program. The company will redeem $6.1 billion in senior notes related to the Capri deal and agreed to reimburse the company's transaction expenses of roughly $45 million.

"With the termination of the merger agreement, we are now focusing on the future of Capri and our three iconic luxury houses," Capri CEO John Idol said in a separate statement. "Looking ahead, I remain confident in Capri's long-term growth potential for numerous reasons."

Price: 56.97, Change: +5.71, Percent Change: +11.14