US' Tapestry & Capri Holdings agree to terminate merger agreement

Joanne Crevoiserat, chief executive officer of Tapestry, said, “We have always had multiple paths to growth and our decision today clarifies the forward strategy. Building on our successful first quarter, we will move with speed and boldness to accelerate growth for our organic business. Tapestry remains in a position of strength, with distinctive brands, an agile platform, passionate teams, and robust cash flow. We have significant runway ahead and are pleased to announce today an additional shareholder return program, as we believe there is no better investment at this time than our own stock.”

Tapestry’s chief financial officer and chief operating officer, Scott Roe, said, “Tapestry’s steadfast commitment to deliver meaningful shareholder value is unchanged. Our strong and consistent cash flow underpins our foundational commitments to invest in our brands and business as well as fund our dividend program. Further, today’s additional $2 billion share repurchase authorization highlights the strength and flexibility of our balance sheet to unlock incremental value, while maintaining our firm commitment to a solid investment grade rating. We are confident in our compelling long-term organic growth agenda and the opportunity to deliver enhanced value to all stakeholders for years to come.”

Tapestry has authorised an additional $2 billion in share repurchases, bringing the total to $2.8 billion. This move underscores the company’s confidence in its financial health and growth prospects. Tapestry plans to implement this programme partially through an Accelerated Share Repurchase (ASR) initiative, funded by a mix of cash and debt, it said in a press release.

The company also reaffirmed its annual dividend rate of $1.40 per share for fiscal 2025 and its commitment to aligning future dividend growth with earnings.

In light of the terminated merger, Tapestry will redeem $6.1 billion in senior notes linked to the acquisition, adhering to a Special Mandatory Redemption clause. Capri Holdings will also be reimbursed approximately $45 million for transaction-related expenses.

Looking ahead, Tapestry confirmed its focus on strengthening its core brands. The company does not anticipate near-term acquisitions and will prioritise ensuring the sustained growth of Coach and Kate Spade.

Tapestry maintained its long-term financial targets, including a gross debt-to-EBITDA ratio below 2.5x, and reiterated its commitment to preserving its investment-grade rating. The company’s Fiscal 2025 financial outlook remains unchanged, with updates expected in February 2025.

Fibre2Fashion News Desk (KD)